Case Note & Summary
The Bombay High Court allowed Notices of Motion filed by Defendant Nos. 3 to 8 seeking rejection of the Plaint -- The Plaintiff had sued Defendants and its directors, including Defendant No. 5 as a nominee director, alleging unauthorized engagement and payment of fees -- The Court found that the Plaint contained no specific allegations against Defendant No. 5 or other directors, with all averments directed solely at the corporate entities -- The Court applied the principle of separate corporate personality and held that directors cannot be held personally liable for company obligations without specific pleadings of personal benefit or grounds for piercing the corporate veil -- The Plaint's generic references to 'the Defendants' without particularizing allegations against individual directors failed to disclose a cause of action -- The Court rejected the Plaint against Defendant Nos. 3 to 8 under Order VII Rule 11 CPC while allowing the suit to proceed against Defendant Nos. 1 and 2
Headnote
The Bombay High Court, allowed multiple Notices of Motion filed by Defendant Nos. 3 to 8 seeking rejection of the Plaint under Order VII Rule 11 and Order I Rule 10 read with Section 115 of Code of Civil Procedure, 1908 (CPC) -- The Court held that the Plaint failed to disclose any cause of action against the said Defendants, who were directors of Defendant No. 2 -- The Plaintiff, Multi Commodity Exchange of India Ltd., had filed Commercial Suit No. 31 of 2015 against MPPL Enterprises Pvt Ltd (Defendant No. 1), its corporate entity (Defendant No. 2), and directors including Defendant No. 5 as a nominee director -- The Court emphasized the principle of separate corporate personality and held that a civil claim against a company does not translate into a cause of action against its directors without specific pleadings -- The Plaint contained no averments attributing any act, role, or wrongdoing to Defendant No. 5 or other directors -- Allegations of fraud and conspiracy were made in a sweeping manner without particulars, failing to meet the requirements of Order VI Rule 4 CPC as established in Electrosteel Castings Ltd. v. UV Asset Reconstruction Co. Ltd. -- The Court relied on precedents including ACG PAM Pharma Technologies Pvt. Ltd. v. Dr. Datsons Labs Ltd. & Ors. and Space Enterprises v. Srinivas Enterprises Ltd. to hold that mere designation as a director does not create personal liability -- The Plaint was rejected against Defendant Nos. 3 to 8 under Order VII Rule 11 CPC
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Issue of Consideration: The Issue of whether the Plaint disclosed any cause of action against Defendant Nos. 3 to 8, particularly Defendant No. 5 as a nominee director, for rejection under Order VII Rule 11 read with Order I Rule 10 and Section 115 of CPC
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Final Decision
The Court allowed the Notices of Motion and rejected the Plaint against Defendant Nos. 3 to 8 under Order VII Rule 11 CPC -- The suit was permitted to proceed only against Defendant Nos. 1 and 2
