Case: Gopal Shrinivasan Vs. National Spot Exchange Limited &amp; Others

Plaintiffs case in theThe Plaintiffs suit is inter alia for the recovery of the amount aggregating to Rs.680,239,7,706.55 to be jointly and/or severally ordered and decreed to be paid by defendant nos.1 to 16 alongwith interest at 18% p.a. as per particulars of claim annexed as Exhibit U to the plaint and for a further relief that defendant no.20 be ordered and decreed to pay to the plaintiff a sum of Rs.29.20 crores along with interest at 18% p.a. from the due date of payment and/or realization thereof as per prime zone agreement dated 10 February 2013.4. As seen from the averments made in the Plaint, the Plaintiff is a company incorporated under the Indian Companies Act, 1956 which carries on business as a "Spot Exchange", providing for an electronic trading platform in spot contracts in commodities on delivery basis. The Plaintiff commenced its business operations from October, 2008. The Defendant no.1 is amember of the Plaintiff and is inter alia trading in various commodities including paddy, for itself and on behalf of its clients. Defendant nos.2 and 3 are proprietary firms and are related entities of Defendant no.1 being largely controlled by the same management and/or proprietors. Defendant no.4 is a company incorporated under the Indian Companies Act, 1956 and is a client of defendant no.1 and is also stated to be largely controlled by defendant no.1. Defendant no.5 was Director of defendant no.1 at the relevant time when transactions/defaults had taken place and was also a Managing Director of Defendant no.4. Defendant nos.6 to 8 are additional Directors of Defendant no.1. Defendant nos.9 to 11 are the shareholders of defendant no.1 who were stated to be responsible for theaffairs and conduct of defendant no.1. Defendant nos.12 and 13 are stated to beDirectors of Defendant no.4. Defendant nos.14 and 15 (Appellants herein) are the nominee Directors of defendant no.4. Defendant no.16 is the Company Secretary of defendant no.4 and Defendant no.17 is the Auditor of defendant no.1 and Defendant no.18 was the Auditor of defendant no.4 at the relevant time who resigned on 21 October 2013. Defendant no.19 was also a Auditor of Defendant no.4 appointed in place of defendant No.18 from 21 October 2013. Defendant No.20 is a company incorporated under the Companies Act and is engaged in the business of real estate/development of properties of which defendant no.10 is a Director.5. It is the case of the Plaintiff that there were defaults committed on the plaintiffs exchange by Defendant No.1 and the same have occurred with the active participation, knowledge and connivance between the defendants. Plaintiff state that defendant nos.5 to 16 (which includes appellants) have utilized the corporate structure and identity of defendant nos.1 to 4 for their own personal gains and are the real beneficiaries of the defaults that have occurred on the exchange platform.6. The plaintiffs states that on 10 June 2013 defendant no.1 executed an Agreement(at Mumbai) with the plaintiffs exchange setting out the terms and conditions, representations, warranties, covenants agreed between them interalia protecting rights of the plaintiffs exchange and other members of the plaintiff exchange. Trading at the plaintiffs exchange took place on the basis of this contract. The trading members were permitted to purchase and sell the commodities on the Exchange platform in the manner and on the terms as specified in the contracts. The plaintiffs permitted defendant no.1 to trade on its exchange platform in contracts of various commodities. All trades conducted on the plaintiffs exchange were through the accounts which were held by defendant no.1 in the HDFCna and State Bank ofBranch details of which are set out by the Plaintiff in paragraph 6(d) of the plaint. These bank accounts would demonstrate that moneys were received by defendant no.1 towards trades entirely executed by it on the exchange platform.7. The case of the Plaintiff is that the defendant no.1 was trading in paddy in Haryana and Punjab and has been executing T+2 and T+25 trades on the plaintiffs exchange. (T+2 would mean trade is concluded on "T" day and delivery and payment would be effected on second business day from"T" day by selling and buying member as the case may be and for T+25 delivery and payment would be effected on the 25th business day). These contracts were governed by Byelaws, Rules and Regulations of the plaintiffs. The defendant no.1 continued to execute these T+2 and T+25 contracts and ledger balance of defendant no.1 was reconciled onbasis and all obligation reports were sent to defendant No.1 which indicate debit and credit entries. This was never disputed by the defendant no.1 as was being routinely followed by the plaintiff which included reconciliation of ledger balance on daily basis from 6 February 2013.8. The plaint further narrates that in April 2012, the plaintiff received a show cause notice from the Ministry of Consumer Affairs, Government of India alleging violation of conditions of notification dated 5 June 2007 by which the plaintiff was allowed to conduct trading in forward contracts of one day duration subject to conditions as contained in the notification. The show cause notice was received by the plaintiff vide letters dated 23 May 2012, 11 August 2012 and 8 July 2013 and 12 July 2013. By a letter dated 12 July 2013 the Ministry directed the plaintiff to furnish undertaking to the effect that no further/fresh contracts shall be launched till further instructions from the authorities and all the existing contracts will be settled on due dates. In pursuance of this, the plaintiff issued a circular dated 22nd July 1013 by bringing changes in the settlement procedure with effect from 23 July 2013 by notifying that all contracts settled by delivery and payment beyond 11 days will be settled on T+20 basis and all contracts currently settled on "net obligation" shall be settled onbasis which includedcontracts such asOn 8 August 2013 the plaintiff decided to settle open trades in which its members had defaulted. It was revealed that there were manyin the account of the defendant no.1 and it was seen that a large an amount of Rs.637,48,977,06.55 Crs. was due and outstanding by the defendant no.1 from 19 July 2013. In August 2013 the plaintiff appointed an independent agency namely "SGS India Limited", to survey the stocks at various warehouses including warehouses which were in control of defendant no.1. However defendant no.1 did not allow the representatives of SGS India Limited to enter the warehouses though it was mandatory under the rules of the plaintiff exchange. An audit at the hands of SGS India Limited was prevented to be undertaken by the defendant no.1. The plaintiff called upon the defendant no.1 to make payment which had become due and payable for the outstanding trades undertaken by it on the plaintiffs exchange as settlement period had come to an end and trades were required to be settled visavis various buyers and sellers. It is the case of the plaintiff that from 19 July 2013 onwards the defendant no.1 failed to make payment and as such had defaulted in payment of the installment amount. The plaintiff in accordance with theand rules of the plaintiff took further steps to declare the defendant no.1 and other similar trading members as defaulters.10. The plaintiff has averred that the defendant no.1 on behalf of itself and on behalf of its clients had admittedly entered into outstanding trades and was liable to pay the amounts that had fallen due thereunder along with interest at 18% p.a. from due dates until payment and/or realization thereof. Defendant nos.1 to 4 had acted upon the outstanding trades received benefits thereunder and caused the plaintiff exchange as also the various counter party investors to act in furtherance of the outstanding trades and the same are therefore, binding upon the defendant nos.1 to 4 and thus are estopped from disputing the liability thereunder. It is averred that Defendant Nos.5 to 16 being directors and share holders and defendant nos.1 and 4 respectively wereof and responsible for the affairs of defendant Nos.1 to 4 and as such they are also liable to jointly and/or severally pay the amounts due from the defendant nos.1 to 4 to various counter party investors under the outstanding trades. The defendant nos.1 to 4 in collusion with Managing Director of the plaintiff and some of the managerial staff who directly reported to him have orchestrated and played a fraud on the plaintiff and counter parties to the outstanding trades, by seeking to represent and assuring that the commodities held thereunder had been duly deposited in the warehouses designated by the plaintiff which representations were false to their own knowledge and which were deliberately and with an intent to defraud the plaintiff and counter parties. This has caused counter parties to the outstanding trades to part with their moneys and enter into outstanding trades on the basis of such fraudulent representations and assurances and have compounded the fraud so played by refusing to allow access to the designated warehouses for the purposes of inspecting the commodities that where purportedly deposited and/or take possession thereof and for the purpose of realization of the amounts from the defendant Nos.1 to 4 under the outstanding trades. All these facts clearly demonstrate lack of bonafides on the part of defendant nos.1 to 16 and if immediate steps are not taken to secure the claim of the plaintiff the defendant Nos.1 to 16 will take all available/possible steps to ensure that the same is defeated. The defendant Nos.1 to 16 have already disposed of/siphoned/shifted the commodities located in the warehouses and have committed a grave breach of trust and have willfully defaulted on its obligation towards the plaintiffs exchange as well as to the various investors who have traded with the defendant no.1.11. On account of the failure to maintain the goods/pay the outstanding amounts as required, the Economics Offences Wing of the Mumbai Police had arrested the then Director of defendant nos.1 to 4, Mr.Sunder Gupta and on 5 July 2014 holding him responsible for the defaults committed on plaintiff exchange by the defendant Nos.1 to 4. It is averred that defendant Nos.1 to 4 have siphoned off the amounts and utilised the same towards buying real estate and towards producing movies. It is averred that the defendant nos.1 to 4 in connivance with defendant nos.5 to 16 will deal with the assets which are in their control and possession and exchange their moneys and/or their assets in such manner to defeat the claim of the plaintiff exchange. The defendant nos.5 to 16 as Directors/shareholders are in effective control of defendant nos.1 to 4 and are therefore in charge of theaffairs of defendant nos.1 to 4. Further inquiries by Economic Offences Wing indicates that personsof defendant Nos.1 to 4 have utilized the moneys and that with ulterior motives and are seeking to defeat the claim of the plaintiffs. It is therefore, necessary, expedient and in the public interest as well as interest of all the stake holders that the claim of the plaintiff is required to be secured by restraining the defendant nos.5 to 16 from dealing with, disposing of or transferring or creating any third party rights or encumbering the property in possession and in control of the consortium of banks in any manner whatsoever.12. The defendant Nos.5 to 16 have equally benefited from the defaults that have occurred on the exchange platform. The plaintiff states that the defendant Nos.5 to 16 and directors of defendant nos.1 to 4 have also benefited from the moneys deposited in the bank accounts of the defendant Nos.1 to 4 and that the defendant nos.1 to 4 are in fact simply vehicles to perpetuate the illegalities which are conceived by the defendant nos.15 to 16 and such illegalities were for the sole benefit of defendant nos.5 to 16.The case of Defendant Nos.14 and 15 for the above reliefs as prayed in their respective Notices of Motion to reject the plaint qua Defendant Nos.14 and 15 is basically on the contentions that there are vague and unsubstantiated allegations against these defendants in paragraphs 2,7, 9, 14, 15 and 27 of the plaint. As the entire case of the Appellants is based on the averments as contained in these paragraphs, it would be relevant as also convenient to extract the contents of these paragraphs which read. .. . . The acts leading to the defaults committed on the Plaintiff Exchange could not have occurred without the knowledge and active participation of these Defendants. As will be demonstrated herein below, the Defendant Nos.5 to 16 have utilized the corporate structure and identities of Defendant Nos.1 to 4 for their own personal gain and are the real beneficiaries of the defaults that have occurred on the exchange platform. . . ...""7. (zz)... . . The Defendant Nos.5 to 16 are the Directors and shareholders of Defendant No.1 and 4 respectively and are in charge of and responsible for the affairs of the Defendant No.1 to 4, and as such, they are also liable to jointly and/or severally pay the amounts due from the Defendant Nos.1 to 4 to the variousinvestors under the Outstanding Trades. In any event, Defendant Nos.1 to 4 in collusion with the erstwhile Managing Director of the Plaintiff and some of the managerial staff who directly reported to him have orchestrated and played a fraud on the Plaintiff and theto the Outstanding Trades by seeking to represent to and assure them that the commodities sold thereunder had been duly deposited in the warehouses designated by the Plaintiff, which representations were false to their own knowledge and which were deliberately and with an intent to defraud the Plaintiff and theand have thereby caused theto the Outstanding Trades to part with their monies and enter into the Outstanding Trades on the basis of such fraudulent representations and assurances, and have compounded the fraud so played by refusing to allow access to the designated warehouses for the purpose of inspecting the commodities that were purportedly deposited and/or taking possession thereof for the purpose of sale and realization of the amounts due from the Defendant Nos.1 to 4 under the Outstanding Trades.""9. The Plaintiff submits that the aforesaid facts clearly demonstrate the lack of bona fides on the part of Defendant Nos.1 to 16. The Plaintiff states that if immediate steps are not taken to secure the claim of the Plaintiff, Defendant Nos.1 to 16 will take all available/possible steps to ensure that the same is defeated. The Plaintiff submits that Defendant Nos.1 to 16 having already disposed of/siphoned off/shifted the commodities located in the said warehouse/property, has committed a grave breach of trust and has wilfully defaulted on its obligations towards the Plaintiff Exchange as well as to the various investors who have traded with Defendant No.1 through the Plaintiff Exchange. The Defendant No.1 has traded on the Plaintiffs Exchange on its own behalf and on behalf of Defendant Nos.2 to 4 and have siphoned of the amounts received by them from the Plaintiff Exchange on account of the trading done, which liability is clearly admitted by the aforesaid letter dated 1st August,2013 and also after having committed to the schedule of settlement have failed and neglected to pay the same. The Plaintiff states that on account of the failure to maintain goods/ pay the outstanding amounts as required, the Economic Offences Wing of the Mumbai Police have arrested the then Director of Defendant Nos.1 and 4 i.e. Surender Gupta on 5th March 2014 holding him responsible for the defaults created on the Plaintiff Exchange by Defendant Nos.1 to 4. It is pertinent to mention that the investigating authorities namely Economic Offences Wing and Enforcement Directorate have stated in various newspaper articles that Defendant Nos.1 to 4 have siphoned off the aforesaid amounts and utilized the same towards buying real estate and towards producing movies.""In view of the above, the Plaintiff apprehends that, the Defendant No.1 to 4 in connivance with Defendant Nos.5 to 16 will deal with the assets in their control and possession and therefore exhaust the monies and/or their assets in such manner to defeat the claim of the Plaintiffs Exchange. The Defendant Nos.5 to 16, as Directors/Shareholders/Company Secretary, are in effective control of Defendant Nos.1 to 4 and are therefore in charge of the day to day affairs of the Defendant Nos.1 to 4. It is submitted that the enquiry by the EOW clearly indicates that the persons in charge of Defendant Nos.1 to 4 have utilized the monies for their own ulterior motives thereby seeking to defeat and defraud the claim of the Plaintiff. This is clearly borne out by the fact that the EOW has recently arrested Mr.Surender Gupta, as noted above. It is submitted that in light of this fact a clear case for protection of the monies siphoned off by Defendant Nos.1 to 4 is made out, particularly in light of the various news reports/ statements made by the officers of the EOW investigating the matter. Hereto annexed and marked Exhibit "BB" and "CC" are the copies of the said newspaper articles. The Plaintiff therefore submit that it is necessary, expedient and in the interest of the public as well as in the interest of justice that this Honble Court be pleased to pass the necessary orders/directions to secure the claim of the Plaintiff by restraining Defendant No.1 from disposing of, alienating, encumbering, parting with possession and/or otherwise creating third party rights in respect of its assets, both movable and immovable, details of which are contained in Exhibit AA hereto.""14. The Plaintiff further states that the Plaintiffs have filed complaints against the various defaulting Trading Members with the Economic Offences Wing of the Mumbai Police, on account of their failure to maintain goods at the said designated warehouses as required, the Economic Offences Wing of the Mumbai Police. The Plaintiff states that, one Mr.Pankaj Saraf has also filed a complaint with the Economic Offences Wing and on the said complaint, Economic Offences Wing has filed an FIR bearing No.89 of 2013 on 30th September,2013. Pursuant thereto, Economic Offences Wing have arrested the MD of Defendant No.4 i.e. Mr.Surender Gupta on 5th March,2014 and thus reflecting that these representative of the defaulting borrowing member/ clients were responsible for the defaults created on Plaintiff exchange. As noted above the recent newspaper articles together with the fact that the EOW, upon investigation, has arrested Mr.Surender Gupta, clearly demonstrate that the Defendant Nos.1 to 4 and their Management (i.e. 5 to 16) are responsible for the siphoning off the Plaintiffs dues. It is submitted that the news article dated 7th March 2014 published in India Today clearly indicates that the enforcement directorate officials have noted to very pertinent facts, firstly it is found that Defendant No.1 and Defendant No.4 are sister concern and therefore, effectively under common management and secondly it appears that the Directors of Defendant No.1 and Defendant No.4 have made categorical admission in relation to the diversion of the monies received from the trades executed on the Plaintiff Exchange. The Plaintiff states that the Enforcement Directorate and the EOW are both statutory authorities.""15. The Plaintiff states that Defendant Nos.5 to 16 have clearly benefited from the defaults that have occurred on the exchange platform. The Plaintiff states that the Defendant Nos.5 to 16 as shareholders and directors of Defendant Nos.1 to 4 have benefited from the monies deposited in the Bank Accounts of Defendant Nos.1 to 4. Without prejudice to the above, the Plaintiff states that the Defendant Nos.1 to 4 are in fact simply vehicles to perpetuate the illegalities which were conceived by Defendant Nos.5 to 16 and which illegalities were of the sole benefit of Defendant Nos.5 to 16."16. The Defendant Nos.14 and 15s case is that the above averments lack credible details so as to seek a relief against defendant nos.14 and 15 and defendant no.4 company. It was contended that defendant nos.14 and 15 are nominee Directors. A meaningful reading of the plaint would clearly reveal that the grievances of the plaintiff are principally against Defendant no.1, the Defendant no.4 on whose behalf Defendant No.1 executed various trades, on the Plaintiffs exchange and Defendant no.5 who is the Managing Director of Defendant No.4 and Director of Defendant No.1, and Defendant nos.12 and 13 who were the Directors andDirector of defendant no.4 and defendant no.16 who is the Company Secretary of defendant no.4 company and not against defendant nos.14 and 15. Defendant no.14 contended that the plaintiff did not disclose as to how defendant no.14 had utilized corporate structure or identity of defendant no.4 for his own personal gains or how he was the beneficiary of the alleged defaults that occurred on the plaintiffs exchange and as to how he wasor responsible for the affairs of defendant no.4 company. There were no material particulars of the role of defendant no.14 in siphoning of commodities or alleged breach of trust in respect of defendant no.4s obligation towards the plaintiff. These particulars were lacking which were necessary make out a case and cause of action against defendant no.14. There was no privity of contract between Defendant no.14 and the plaintiff and thus defendant no.14 could not be held liable for any purported act committed by defendant no.1 and/or defendant no.4 company. On 13 September 2013 the defendant no.14 was constrained to resign from the Board of Directors of defendant no.4 with immediate effect and a copy of Form 32 was filed by the defendant no.4 Company with the Registrar of Companies in this regard. There was no cause of action against defendant no.14 and therefore plaint deserves to be rejected against defendant no.14.17. The case of the defendant No.15 is similar to defendant no.14 as noted by us above. Defendant No.15 contends that he is a nominee Director of defendant no.4 and he has been improperly joined as party defendant in terms of Order 1 Rule 10(2) of C.P.C. It was contended that there was a statutory bar as to the jurisdiction of the Court to decide the suit against defendant No.15 in view of the provisions of Section 3 of the International Finance Corporation (Status, Immunities and Privileges) Act, 1958. Defendant No.15 also pleaded that the allegations made against defendant No.15 in the plaint were vague, ambiguous and lacked specific particulars and were in complete disregard to the requirements of Order 7 Rule 11 showing no cause of action as also requirement of Order 6 Rule 4 of C.P.C. in relation to the allegation of fraud.18. The learned single Judge by the impugned order has rejected the notices of motions filed by defendant nos.14 and 15 repelling the contentions as urged on behalf of defendant Nos.14 and 15. The learned Single Judge held that the averments made in the plaint as read in its entirety clearly reveals a cause of action against defendant Nos.14 and 15. The learned Single Judge held that the case in the plaint against Defendant Nos.14 and 15 was of fraud and collusion and siphoning of fund. It is observed that substantial reliefs are prayed against the defendants jointly and severally to pay the Plaintiffs the amounts as claimed in the suit. As regards the contentions on the part of defendant Nos.14 and 15 that the averments in the plaint against these Defendants including allegation of fraud are vague and not specific and have also been rejected. It is observed that there submissions are not borne out from holistic reading of the plaint. As regards immunity as claimed by Defendant No.15 under the provisions of the International Finance Corporation (Status, Immunities and Privileges) Act, 1958, the learned Single Judge has observed that the case being of a fraud, the question of immunity as a bar under the provisions of the Act, cannot be a issue to be decided in an application under Order 7 Rule 11(a) of C.P.C.

Reasoning:
23. Having perused the plaint, we have noted above the relevant averments in the context of the issues as arising in the present appeal. The averments in the plaint indicate that this is a composite suit where the plaintiff has sought reliefs of recovery of the money claimed against the defendants on contract as also by way of damages being a liability under the torts. This is clear from several averments of connivance between the defendants and the joint and several liability arising for payment as claimed by the Plaintiffs in making the suit claim.41. Thus, the approach of the Appellants/defendants in reading of the plaint, in our view, is not correct. As the pleadings are not to be strictly interpreted in the manner in which the each and every allegations is brought out in the plaint, what is necessary is to plead all material and relevant facts on which the case of the Plaintiff would stand. Also in Ramswaroop Gupta Vs. Bishun NarayanAnr., AIR 1987 SC 1242  " (Read) their Lordships have observed that the pleadings should receive a liberal construction, no pedantic approach should be adopted to defeat justice ontechnicalities. It is held that whenever the question about lack of pleadings is raised, the enquiry should not be so much about the form of the pleadings but the endeavour of the Court should be to ascertain the substance of the pleadings. In ascertaining whether the plaint shows cause of action, the Court is not required to elaborate the inquiry in the doubtful or complicated question of law and fact. The endeavour of the Court would be to ascertain whether on the allegations a cause of action is shown and so long as the plaint discloses the same cause of action, and so raises a question, fit to be decided by a Judge. Order 7 Rule 11(a) of C.P.C. though would confer a power on the Court to reject a plaint on failure on the part of the Plaintiff to disclose a cause of action, but such power should not be exercised when averments made in the plaint and the documents upon which the reliance has been placed would disclose a cause of action.42. As regards the contention as urged on behalf of defendant nos.14 and 15 that there is no cause of action against Defendant Nos.14 and 15, inasmuch as this suit is based on a contract between the plaintiff and Defendant Nos.1 and that the relief which is being sought against Defendant Nos.14 and 15 is on tort and that such a relief cannot be claimed against Defendant Nos.14 and 15 in a suit on the basis of a contract. This submission on behalf of the Appellants is not well founded. In our view, the suit is properly framed and there is noof causes of action. On a careful reading of the plaint what we may note that the suit clearly falls within the provisions of Order 1 Rule 3 of C.P.C. as the reliefs arise out of a case of a breach of the contract as against Defendant No.1 and in tort against the other defendants which right to relief was available to the plaintiffs. Order 1 Rule 3 is not confined to joinder of parties above but would also encompass joinder of causes of action. A conjoint reading of Order 1 Rule 3 and Order 2 Rule 3 of C.P.C. would indicate that it is permissible to join different causes of action against the different defendants in one suit. A holistic reading of the plaint in the present case indicate that the plaintiff has sought reliefs against the defendants which arise out of the transaction which would involve not only Defendant Nos.1 to 4 but also the other defendants which includes Defendant Nos.14 and 15 and accordingly, they can be joined, jointly and/or severally in the alternative in one and the same suit. The requirement of Order 1 Rule 3, therefore, would stand satisfied read with the provisions of Order 2 Rule 3 which would permit joinder of causes of action. It was, therefore, permissible for Plaintiffs to join causes of action on the plea of breach of contract which is against Defendant No.1 In taking this view, we are also supported by the decision of the Division Bench of Calcutta High Court in the case "Shew Narayan Singh Vs. Brahmanand SinghOrs., (AIR 1950 Calcutta 479)" in which their Lordships have observed thus:18.The last argument on behalf of the petitioner may be stated thus. The cause of action against the original defendant is based on contract while the cause of action against the other defendants is based on tort. Causes of action so differently based cannot be joined. I am not prepared to accept this view. There is nothing in the provisions of the Code of Civil Procedure which supports it. As pointed out above the Code permits a joinder of different causes of action against different defendants. The fact that so far as the different defendants are concerned, their liability arises out of their different legal relationships with the plaintiff would not, in my opinion, bar this suit and drive the plaintiff to institute separate suits. Order 1 R.3 and O.2 R.4 are directed towards avoiding multiplicity of litigation. What would be the result of giving effect to the view propounded / The plaintiff would first have to institute a suit, against defendant 1 alone and establish a breach of contract. If he succeeded in so doing, he would then have to institute another suit against defendant 1 and the added defendants and again establish, first, the breach of the contract because the other defendants not being parties to first suit would not be bound by any decision arrived at therein; he would also have to establish conspiracy. It may be that in the second suit the added defendants may succeed in showing that there was no breach of contract. This would lead to conflicting decision on the same issue. It is to avoid such anomalies and inconsistencies that the Code has provided that one suit is permissible.It is true that the claim against defendant 1 is based on the breach of a contractual right while the claim against the other defendants is based on the breach of a common law right, but the right to relief is available in respect of both sets of defendants because the contractual right has been infringed. If it had not been infringed no question of tort would arise. In such a case one suit against all is in my opinion permissible. This view has been taken by a Special Bench of the High Court at Rangoon in the case of P.B.Boss V. M.B.N. Chettyar Fir, AIR (25) 1938 Rang 185 at p.188: (1938 Rang LJ 303 S.B.) Dankley,J. Observes :"The learned Judge appears to have thought that there was aof defendants in the original suit, and that a decree based on a breach of contract against one defendant and a decree of damages in tort against another defendant cannot be made in the same suit. With the greatest respect, this is a misconception of the law. There was noof defendants in this case; the provisions of O.1 R.3, Civil P.C., cover the joinder of the three defendants in the suit in the Township Court. There is no reason why a decree for damages for breach of contract against one defendant and a decree for damages in tort against another defendant should not be pased in the same action; in R.T.Grant V. Australian Knitting Mills Ltd., (1936)AC 85 : (AIR (23)1936 PC 34) the Privy Council madea decree against the retailer of the underwear for breach of contract and against the manufacturer of the underwear in tort."The Privy Council decision is R.T. Grant V. Australian Knitting Mills Ltd., and it is also reported in AIR (23) 1936 PC 34. The Privy Council upheld a decision of the Australian Court awarding damages in the same suit against a retailer for breach of contrast and against the manufacturer for the negligence of tort. I would refer to p.39 of the report where the Lordship said:"The liability of each respondent depends on a different cause of action though it is for the same damage. It is not claimed that the appellant should recover his damage twice over."The claim against both retailer and manufacturer was upheld.This principle would apply to the present case.""19. I would also refer to the case of Frankenburg V. Great Horseless Carriage Co. (1900)1 QB 504 at p.509: (69 LJ QB 147) where the Court of Appeal refused to give effect to a similar technical objection. They said:"In substance the shareholder had one grievance. Call its cause of action or what you like, and in substance he has cue complaint and all the persons he sues have, according to him been guilty of conduct which gives him a right to relief in respect of that one thing which they have done, namely, the issuing of a prospectus." The position here is the same. The plaintiff has one grievance viz. That the contract has been broken and he alleges that all the defendants have joined or conspired together in causing this breach. I can see no reason why one suit against all should not be allowed."43. Further in this context on behalf of the Appellants the reliance on the decision in Rajkot Municipal Corporation vs Manjulaben Jayantilal NakumOrs. (1997) 9 SCC 552  , would not assist Defendant Nos.14 and 15. In this case the Respondent Manjulaben had filed a Suit, claiming damages against the Municipal Corporation on the ground that the Municipal Corporation had failed in its statutory duty to check the healthy condition of trees, as her husband had died by falling of a a tree which, according to Majulaben was not maintained in a healthy condition by the Municipal Corporation. It was her claim that the statutory duty of the corporation gave rise to a tortuous liability. In this context, the Suit filed by Manjulaben was decreed by the trial Court for a sum of Rs.The decree was confirmed by the Division Bench in appeal. In this context, the Supreme Court in paragraph 10 of this decision made observations that tort and contract are distinguishable. It was observed that in tort, liability is primarily fixed by law while in contract further observed that if the claim depends upon proof of the contract, action does not lie in tort and if the claim arises, from the relationship between the parties, independent of the contract, an action would lie in tort at the election of the Plaintiff although he might alternatively have pleaded in contract. In our opinion, this decision would certainly not avail to the benefit of the Appellant as these observations of the Supreme Court itself make it clear that even if a claim between the parties arises independent of a contract still an action would lie in tort at the election of the Plaintiff. In the present case, the Plaintiffs suit against Defendant no.1 may be on contract nonetheless, the Plaintiff could very well maintained his suit against the Appellant/Defendant Nos.14 and 15 diverse the contractual relations between the parties.44. This takes us to the other issue as urged on behalf of Defendant Nos.14 and 15 that they do not become personally responsible for the acts of the Company. In this regard reliance is placed on behalf of Defendant Nos.14 and 15 on the decision of the learned Single Judge of Delhi High Court in the case "Tristar Consultants vs Customer Services India Pvt.Ltd.Anr., 2007 Delhi 157". There cannot be a dispute on the proposition as contained in paragraph 19 to 23 of the decision that individual Director would have no power to act on behalf of the company of which he is a Director unless so authorised. In the legal position as a Company stands, the Directors of the Company would have no fiduciary or contractual duty towards a third party who deals with the company. However, as observed by us above,the present case is not a case which merely rests on the contractual terms but according to the plaintiffs, it is a collusion fraud and the defendants becoming beneficiaries of such acts. It is for these reasons, the normal role of a Director in the normal course, as canvassed on behalf of the defendant nos.14 and 15/Appellant would not become applicable in the facts of the present case. In considering such pleas, the facts and circumstances as borne out in the pleadings in each case are required to be considered so as to determine as to whether any cause of action is made out or otherwise before exercising power as conferred under Order 7 Rule 11(a) of C.P.C.45. The Appellants reliance on the decision of the Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. vs Neeta Bhallaanr., (2005) 8 SCC 89  , is in support of their submission that merely because the Appellants were Directors of Defendant no.4 Company, there cannot be any monetary liability on the Directors and the liability would be of the company. The Supreme court observed that there is no universal rule that a Director of a company would beday affairs. However, the Supreme Court at the same time observed that as to what was the role of the Director of a Company is a question of fact depending on the peculiar facts in each case. This decision arose out of the proceedings initiated under sections 141, 138 of the Negotiable Instruments Act, 1881 and in that context, the Supreme Court had made these observations that to fasten a criminal liability a specific case should be spelt out in the complaint against the person who has sought to be made liable. Parameters of the pleadings in a criminal complaint case cannot be made applicable to the facts of the present case where the issue is under Order 7 Rule 11(a) and Order 1 Rule 10(2) of the Code of Civil Procedure.46. In the case of Mukesh Hans (supra) the learned Single Judge of the Delhi High Court was considering a case arising out of the decision of the trial Court decreeing a summary Suit against the Directors of a company incorporated under the Companies Act. The Company had failed to redeem the convertible debentures issued to the plaintiffs. The decision to issue these debentures was of the Board of Directors of the Company through whom the Company was acting. In these circumstances, the Court held that the directors cannot be held to be responsible when there was no assertion in the plaint that the Directors had undertaken to make payment to the plaintiffs of the loan amount on behalf of the company. There was no case made out for piercing of the corporate veil. Further if fraud was to be made the basis of the decree when the plaint did not have sufficient particulars in that regard. These being the facts this decision would not be applicable as in the present case there are allegations of fraud and connivance. The facts are peculiar as seen from the plaint. The Court cannot in applying the principles under Order 7 Rule 11(a) and Order 6 Rule 4, be unmindful of the enormity and the complexity of the cause as reflected in the plaint. This would not permit defendant nos.14 and 15 to justify their case under Order 7 Rule 11 to rely on this decision of the learned Single Judge of the Delhi High Court.47. In this context, the reliance on behalf of the learned Counsel for the Plaintiff on the decision of the learned Single Judge of the Delhi High Court in the case of "Deepak Ansal Vs. Ansal Properties and Industries Ltd.Anr." (supra) and also the decision of the learned Single Judge of this Court in "Clarinda DSouza Vs. Mccann Erickson India Ltd." (supra) is well founded inasmuch as the Court would be required to consider all the averments in the plaint in relation to the reliefs as prayed for in the suit. In the present case as we have noted above there are sufficient averments for us to conclude that interference under the powers of the Court under Order 7 Rule 11(a) read with Order 1 Rule 10(2) is not warranted at this stage.48. In view of our above observations, the reliance in the decision of "Church of Christ Charitable Trust and Educational Charitable Society Vs. Ponnoamman Educational Trust, (2012)8 SCC 706  " would also not assist the Appellants. We are in complete agreement with the contentions as urged on behalf of the Plaintiff/Respondent No.1 that the plaint has made out a cause of action against defendants Nos.14 and 15. The reliance on the part of the Plaintiff on the decision of the Supreme Court in the case "Sopan vs Assistant Charity Commissioner" (supra) in support of the proposition that the intention of the party concerned is to be gathered primarily from its tenor and terms of the pleadings taken as a whole and no pedantic approach should be adopted to defeat justice ontechnicalities, is well founded.49. We may thus observe that the plaint in the present case contains a statement of all the material circumstances constituting fraud. It is trite law that an application under Order 7 Rule 11 read with Order 1 Rule 10(2) can be moved at any stage of the suit. We are not persuaded to form an opinion at this stage that the averments made in the plaint are thus not sufficient for the purpose of seeking relief as claimed in the suit against Defendant nos.14 and 15. It also cannot be overlooked that some facts are within the special knowledge of these defendants. These facts cannot be expected to be pleaded by the Plaintiffs.