* IN THE HIGH COURT OF DELHI AT NEW DELHI
st
Reserved on: 21 February 2024
th
% Pronounced on: 28 June, 2024
+ CS(OS) 1180/2002, I.A.9235/2020 & I.A.5313/2021
LINK ENGINEERS (P) LIMITED
Link House,
4/3 Kaikaji Extension,
New Delhi - 110 019 ..... Plaintiff
Through: Mr. Aditya Bakshi and Ms. Tulna
Rampal, Advocates
versus
M/S ASIA BROWN BOVERY LIMITED
Riot No.22-A,
Shah Industrial Estate, 1st' Floor,
Off Veera Desai Road
Andheri (West), Mumbai - 400 053
Defendants
…..
Through: Mr. Ratan K. Singh, Mr. Nikhilesh
Krishnan, Ms. Ritika Priya and Mr.
Abhishek Singh, Advocates for D1.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
J U D G M E N T
1. The plaintiff has filed the Suit for recovery/damages seeking recovery
of an amount of Rupees Five Crores Twenty-Nine Lacs and Ninety
Thousand (Rs. 5,29,90,000/-) and the interest thereon @ 18% per annum till
the realization of outstanding amount from the defendants.
2. Briefly stated, defendant No. 1 was carrying on the business of
manufacturing and supplying power plant equipment, and services with M/s
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 1 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
BHEL as the main competitor in India which was getting preference as the
Public Sector Undertakings. The defendant No.1 felt that if it can enter in a
Joint Venture Company with National Thermal Power Incorporation
Limited (NTPC), it would be placed in a more advantageous position for
future power projects from NTPC and various State Electricity Boards and
also in relation to R&M Projects in existing power units. The defendant No.
1, who had earlier availed the service of plaintiff towards liasoning in
relation to securing numerous Projects, sought to engage its service to assist
the defendant No. 1 in entering into a Joint Venture with NTPC for
Rehabilitation, Remuneration and Modernisation of thermal power stations.
Accordingly, after several personal meetings and telephonic discussions, the
Plaintiff and defendant No. 1 entered into an Agreement dated 15.07.1998
whereby the plaintiff agreed to provide the Defendant No. 1 with its service
and expertise, and to assist it in entering into a Joint Venture with NTPC.
The total consideration to be paid by defendant No. 1 was in two parts i.e.
Rs. 20,00,000/- as an upfront service charged on entering into a suitable
Agreement with NTPC and an amount of Rs. 5 crores immediately upon the
R&M business coming through i.e. Projects being awarded to defendant No.
1 and/or the Joint Venture Company.
3. It is asserted that because of the services of liasoning and image
building work, a 50-50 Joint Venture Company was formed by the
defendants with the NTPC in September 1999, to provide comprehensive
services to the customers relating to rehabilitation, renovation and
modernisation of Power situation in India and in other countries. Therefore,
the plaintiff has become entitled to upfront payment of Rs.20,00,000, which
the Defendants have failed to pay.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 2 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
4. The plaintiff has claimed that it has come to know in definite terms
that the defendants have received technically and commercially clear Orders
as per the Brochure of Joint Venture Company as envisages in Agreement
dated 15.07.1998 between the plaintiff and defendant No. 1. Therefore, the
defendants are liable to pay a sum of Rs. 20 lakhs to the plaintiff in terms of
the Agreement dated 15.07.1998 (hereinafter referred to as an Agreement).
The Defendants further agreed that on the allotment of Korba Amarkantak
Rehabilitation Projects, an amount upto Rs. 5 crore over and above this Rs.
20 lakhs, shall be released to the plaintiff.
5. Moreover, the Defendants showed the Letters dated 18.03.1999
written by Madhya Pradesh Electricity Board vide which they had written
that all future R&M Projects in India including the aforesaid Projects shall
be solely dealt by the Joint Venture Company (JVC) formed by the
defendant No.1 and NTPC. It is claimed that the aforesaid Projects have
been assigned to the JVC which was formed solely due to the expertise and
specialised service of the plaintiff. It has rendered its service to the
Defendants who are bound to fulfil their obligations under the Agreement.
6. The plaintiff sent a Legal Notice dated 27.11.2001 to defendant No. 1
and made a demand of its legitimate dues. The defendant No. 2 and 6 gave a
Reply dated 05.12.2001 stating that the defendant No.2 and 6 are not aware
of any transaction as claimed by the plaintiff in its Notice. The defendants
No. 1, 3, 4, and 5 also gave a Reply dated 15.12.2001 which contained only
bald denials of their liabilities.
7. Another Letter dated 15.02.2002 was written on behalf of defendant
No. 1, 3, 4 and 5 who asserted that pursuant to the Scheme of Demerger
under Section 391 to 394 of the Companies Act, 1956 filed in Bombay High
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 3 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
Court, the defendant No. 1 has demerged and hived off an entire undertaking
relating to the Power Business of defendant No. 1 in favour of defendant No.
2 on an ongoing concern basis including all liabilities and debts pertaining
to the Power Business of defendant No. 1. The consequences of the
Demerger has been that all debts and liabilities pertaining to the Power
Undertaking of defendant No. 1, has automatically been transferred and
vests in defendant No. 2. Defendant No. 1 therefore, cannot be held
responsible or liable for any of the obligations under the Agreements which
it may have entered in with the plaintiff. Furthermore, no benefits have been
reaped by defendant No. 1 and it is defendant No. 2 which is the real
beneficiary of the Contract and therefore, no claim is maintainable against
defendant No. 1.
8. The plaintiff gave his Rejoinder dated 02.01.2002 stating that no
cognisance can be taken of these bald denials by the Defendants.
9. It is asserted that no individual Notice has been issued to the plaintiff
calling upon it to attend and vote at the meeting of unsecured creditors of
defendant No. 1, as is required under Section 391-394 of the Companies
Act, 1956.
10. Thus, the plaintiff is entitled to Rs.5,29,90,000/- along with interest @
18 % p.a., for which the present Suit has been filed.
11. The defendant No. 1, in its Written Statement to the amended
plaint has submitted that the entire claim of the plaintiff arises out of the
Agreement dated 15.07.1998, allegedly executed between the plaintiff and
defendant No.1. It is submitted that under this alleged Agreement, the terms
of payment were yet to be finalized and was ridden with uncertainty and in
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 4 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
fact, there was no Agreement at all and it is non est in law. At best, this
document reflects a broad and general understanding that in the event,
defendant No. 1 forms a Joint Venture, the services of the plaintiff may be
utilized on the terms to be mutually agreed by the parties. The basis of the
Understanding was on the happening of defendant No. 1 entering into
suitable arrangement with NTPC. Since no such Agreement materialized,
the essential pre-condition for the aforesaid Understanding to come into
force and effect, was never achieved. Therefore, there was no valid contract
between the plaintiff and defendant No. 1. Furthermore, the plaintiff has not
provided any services under the alleged Agreement and also the Defendant
No. 1 is not a beneficiary in any respect thereof in any manner whatsoever.
There is therefore, no cause of action against the defendant No. 1.
12. It is further submitted that the perusal of this alleged Agreement
makes it apparent that the services of the plaintiff were engaged for assisting
in preparation of Report, collection of the relevant information and pursuing
various related matters in connection with the Joint Venture Proposal with
NTPC. For this, the plaintiff was required to follow up the Tender with
NTPC, deploy sufficient manpower for follow up and hold the discussions
from time to time. Further, the plaintiff was required to report periodically
on the development of the proposals and communicate the suggestive
strategy in respect thereof. The plaintiff failed to do so and did not provide
any of the aforesaid services in terms of the alleged Agreement. The present
Suit also does not contain any specific details of the service allegedly
rendered by the plaintiff pursuant to the Agreement. The entire aspect
relating to the performance by the plaintiff and its obligations under the
alleged Agreement are vague, inconclusive, non-descript, unsubstantiated,
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 5 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
and evasive terminology has been used lik the plaintiff successfully
e “
carried out the liasoning and image building work Joint venture was
” and “
formed solely due to the efforts and service of the plaintiff , which do not
”
further the cause of the plaintiff.
13. Moreover, the payment of upfront service charges of Rs.20,00,000/-
was contingent upon and subject to defendant No. 1 entering into a Suitable
Agreement with NTPC for the Joint Venture Proposal. However, no Joint
Venture or any Agreement ever got formed between defendant No. 1 and
NTPC. Admittedly, the Memorandum of Understanding (MOU) in respect
of the Joint Venture was entered into between NTPC and ABB Kraftwerke
AG, Germany, which is an entity different from the defendant no.1.
14. Since the event as contemplated did not happen and the purpose was
not achieved, the alleged Agreement is void and not enforceable in law. It is
also a case of uncertainty. Furthermore, admittedly, the Power Business
Undertaking of defendant No. 1 stands de-merged in favour of Defendant
No. 2 with effect from 01.10.1999; as the consequences of this Demerger,
any liabilities relating to Power Business of defendant No. 1 stands
automatically transferred and vested in defendant No. 2. The Defendant No.
1, under no circumstances can be held responsible and liable for any of its
obligations under the alleged Agreement in relation to the Power Business
which stands transferred to defendant No. 2.
15. It is further submitted that the Scheme of Demerger had undergone the
process of obtaining all the requisite approvals from the shareholders and
creditors of defendant No. 1, the Central Government and the High Court of
Bombay in accordance with Provisions 391 and 394 of the Companies Act.
The proposal of the Scheme was widely advertised and circulated inviting
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 6 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
claims from the Public at large and creditors generally. It was incumbent
upon the plaintiff to allege or assign a claim, if any, and seek adequate
safeguard from the Court to protect its interest at the time of hearing of the
petition by the High Court. Having failed to do so, the plaintiff is now
estopped form alleging any claim in relation to the Power Business of
defendant No. 1. It is further submitted that defendant No. 1 has been
impleaded mischievously by the Plaintiff in order to unjustly enrich itself
knowing full well that defendant No. 1 has no personal liability under the
Agreement.
16. The plaintiff and defendant No. 2 had entered into discussions and
communications vide letter dated 05.09.2000, 26.09.2000 and 23.05.2001 in
relation to the Agreement dated 15.07.1998 and the Settlement of alleged
dues under the Agreement. The exchange of letters between plaintiff and
defendant No. 2 reflects that they had discussions even prior to filing of the
present Suit. Having entered into such discussions, the Plaintiff and
defendant No. 2 cannot now plead ignorance to the discussions that they had
even prior to filing of the Suit. The present Suit against defendant No. 1 has
been filed with collateral motives, as an afterthought. The plaintiff therefore,
cannot claim that it was not aware of the transfer of all the rights and
liabilities of defendant No. 1 to defendant No. 2 nor can defendant No. 2
deny the existence of the alleged Agreement dated 15.07.1998 and its rights
and obligations there under.
17. It is further asserted that the JV between ABB Germany and NTPC
had materialized because of the mutual efforts and commitments of the
respective parties. It is evident from the MOU dated 10.12.1998 that a
detailed selection process was undertaken by NTPC, which had placed an
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 7 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
open call for selection of a JV partner. It is only after following the detail of
the due procedure of the NTPC selected ABB Germany as its Joint Venture
partner. It is therefore wrong of the plaintiff to allege that it had provided
any services in relation to the JV or that the JV was the result of the efforts
of the plaintiff.
18. The defendant No. 1 has claimed that its neither a necessary nor a
proper party as the defendant No. 1 has no obligations under the alleged
Contract and Agreement, since the Power Business of defendant no. 1 stands
transferred.
19. The defendant No. 1 has explained that subsequent to the MOU
executed between the ABB Germany and NTPC, they entered into a Joint
Venture. After March 2002, even ABB Germany has ceased to be Joint
venture partner as all the rights and obligations in respect of the Power
business have been taken over by ALSTOM. It was thus, asserted that the
Suit is bad for non-joinder of the necessary parties.
20. The defendant No. 1 asserts that the plaintiff in Paragraph 12 and 14
of the plaint claimed that it had definite knowledge of two Contracts namely,
Korba Amarkantak Rehabilitation Projects and Project worth Rupees 240
crores were allegedly awarded to the alleged Joint Venture between the
defendant No. 1 and NTPC, however, in Paragraph 17 of the plaint it pleads
ignorance about the Contracts awarded to the JV, for the purpose of
calculating the amount of Court Fees. The defendant asserts that the plaintiff
has deliberately framed the Suit in a manner to avoid payment of court fee
on the entire amount of Rs. 5 crores and thus, the Plaint is liable to be struck
of as frivolous and abuse of process of the law. Moreover, this Agreement
dated 15.07.1998 is not properly stamped and cannot be read into evidence.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 8 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
21. On merits, all the averments made in the plain were denied and the
Defendant No. 1 reiterated that there was no valid agreement and there are
no obligations and liabilities arising against the Defendant No. 1 under the
said Agreement.
22. The defendant No. 2 and 6 in their Written Statement took the
preliminary objection that admittedly, there is no Agreement between the
plaintiff and defendant No. 2 and there is no cause of action disclosed
against the defendants and Suit is bad for mis-joinder of the parties. Their
names are liable to be deleted from the array of parties. Furthermore, as per
the arrangement for Demerger between defendant No. 1 and 2, the existence
of the Agreement was never disclosed by defendant No.1 to defendant No. 2
nor was there any provision for the liability made or disclosed as a
contingent liability by defendant No. 1 to defendant No. 2. Therefore, by no
stretch of imagination, the answering defendants can be called as successor
in interest of defendant No. 1 and are not liable to pay any amount as
claimed by the plaintiff.
23. Without prejudice to the aforesaid, it is asserted that the perusal of
this Agreement dated 15.07.1998 would clearly show that this Agreement is
not enforceable being vague and uncertain and is therefore, void. The
alleged Agreement does not describe nature of the service nor the manner in
which the alleged fee was to be paid. It was contingent upon the defendant
No. 1 entering into a suitable Agreement with NTPC. No such Agreement
has in fact, been entered into and it is also not enforceable as per its own
terms, as no JV between NTPC and defendant No. 1 ever materialized.
24. It is further asserted that Mr. G.K. Sahi, who had allegedly signed this
Agreement on behalf of defendant No. 1, was not an authorized signatory as
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 9 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
per the knowledge of defendant No. 2 and 6. Furthermore, this Agreement
is claimed to have not been validly stamped and therefore, not enforceable.
On merits, all the averments made in the plaint are denied.
25. The defendant No. 3 and 4 and the plaintiff in their Written
Submissions took the similar pleas of the Suit being bad for misjoinder of
parties for having wrongly impleaded the Defendants as they were merely
the employees of defendant No. 1 and are not personally liable for the
business of defendant No. 1. It was claimed that no cause of action is
disclosed against them and the Suit is liable to be rejected. It was further
asserted that the requisite Court Fee has not been paid by the plaintiff.
Moreover, the material facts to disclose cause of action have not been stated
in the plaint.
26. The plaintiff in its replication to the respective Written Statements of
the Defendants, has re-affirmed its assertions made in the plaint.
27. Though, Defendant No. 3 to 5 had filed their Written Statement as
stated above, but they were deleted from the array of parties vide Order
dated 07.08.2006 on their application under Order VII Rule 11 CPC. The
Defendant No. 6 was also deleted Order dated 28.08.2006, by observing
that there was no cause of action disclosed against him.
28. I.A.12942/2012 was filed under Order XXIII Rule 1 CPC on behalf of
the plaintiff for withdrawal of the Suit against the defendant No. 2. It was
submitted in the application that the plaintiff, is satisfied that there is no
liability of defendant No. 2 qua the plaintiff. In keeping with good business,
it sought permission to withdraw the Suit against defendant No. 2. This
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 10 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
Application of the plaintiff was allowed vide Order dated 03.08.2012, and
the Suit was permitted to be withdrawn against defendant no.2.
29. The suit of the plaintiff thus, survives only against the defendant
no.1.
30. Issues on the pleadings were framed on 28.08.2006 and 03.12.2007 as
under:
Issue No.1: Whether relating to the agreement dated 15.07.1998,
plaintiff is entitled to a sum of Rs. 20 lacs? If yes, from which
defendant? OPP
Issue No.2: Whether the plaintiff is entitled to a preliminary decree
for rendition of accounts? If yes, against which defendant?
OPP
Issue No.3: Relief.
31. The plaintiff in support of this case examined PW-1 SK Sikka, the
Chairman of the Plaintiff Company who, proved its Certificate of
Incorporation as exhibit PW-1/1. The Board Resolution dated 11.07.2002 in
his favour is exhibit PW-1/2. He has deposed on similar lines as the
averments contained in the plaint. The detailed testimony shall be
considered subsequently.
32. The defendant No.1 examined DW-1 Vivek Kler, AR who has also
deposed on similar lines as the defence taken by defendant No. 1 in its
Written Statement.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 11 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
33. The detailed arguments were addressed and Written Submissions filed
on behalf of both the parties. The record and the evidence perused. The
issue wise findings are as under:
Issue No.1: Whether relating to the agreement dated 15.07.1998,
plaintiff is entitled to a sum of Rs. 20 lacs? If yes, from
which defendant? OPP
34. The present Suit involves the interpretation of the Commercial
contracts. The Apex Court in the case of Dhanrajamal Gobind Ram v.
Shamji Kali AS and Co. AIR 1961 SC 1285 held that where the intention of
parties are not clear in commercial contracts then the rule to apply is to infer
the intention from the terms and nature of the contract from general.
35. In the case of Swarnam Ramachandran (SMT) v. Aravacode
Chakungal Jayapal (2004) 8 SCC 689 the Apex Court while deciding the
issue of whether time was of the essence of a contract observed that
intention of parties can be ascertained from the (i) express words used in the
contract; (ii) nature of the subject-matter property; (c) nature of contract; and
the surrounding circumstances.
36. In the case of Khardah Company Limited v. Raymon and Co. (India)
Pvt. Ltd. (1963) 3 SCR 183 the Apex Court observed that the terms of a
contract can be express or implied from what has been expressed and it
would be legitimate to take into account surrounding circumstances for
construction of the contract.
37. These judgements do not aid the case of the plaintiff as the intention
of parties is clearly expressed from the terms of Agreement dated
15.07.1998 whereby the plaintiff agreed to provide the Defendant No. 1
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 12 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
with its service and expertise, and to assist it in entering into a Joint Venture
with NTPC.
38. Guided by these principles, the facts of the present case may be now
considered. The claim of the plaintiff rests solely on the alleged Agreement
dated 15.07.1998 written by defendant No.1/ M/s Asea Brown Boveri
Limited for engaging the services of plaintiff to assist defendant No.1 in
preparation of Report, etc. relating to proposed projects of Thermal Power
Station in India which it intended to get, by entering into a Joint Venture
with NTPC.
39. According to the plaintiff, defendant No.1 entered into a Joint Venture
with NTPC in 1998 about which it came to know through the PW-1/31A
Brochure of NASL (NTPC-ABB Alstom Power Services Limited).
40. The defendant No.1 has taken multiple defences; firstly, defendant
No.1 got demerged in October, 1999 and its power division was absolutely
transferred to defendant No.2; secondly there was never any Joint Venture
constituted between defendant No.1 and NTPC; and thirdly, that no services
whatsoever, were rendered by the plaintiff in getting the Joint Venture with
NTPC.
I. Demerger of defendant No.1 and transfer of its Power Division to
defendant No.2 in October, 1999:
41. The first aspect which thus, needs to be considered is whether the
entire Power division of defendant No.1/Asea Brown Boveri Ltd. got
transferred to Asea Brown Boveri Management Ltd. (subsequently the name
was changed to POWERCO)/ defendant no.2 w.e.f. 01.10.1999. To
understand the terms of demerger, it is pertinent to refer to scheme of
demerger dated 17.11.1999 which was accepted by Bombay High Court.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 13 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
42. Clause 1 of the Scheme dealt with the definitions. Sub-clause (e)
defined POWERCO and Sub-clause (h) defined Undertaking, as under:
Clause :
1(e) defined “POWERCO” as under
"POWERCO" means ASEA BROWN BOVERI
“ (e)
MANAGEMENT LIMITED, a company incorporated under the
Companies Act, 1956 and having its Registered Office at Vaswani
Chambers, 264-265, Dr Annie Besant Road, Mumbai 400 025,
Maharashtra.
”
“Clause 1(h) defined “Undertaking” as under:
aking shall mean all power generation activities
“Undert
carried out by INABB (the defendant no. 1 herein) on a
going concern basis consisting of the following:
)
i) ……….. vii
And shall include (without being limited to) the
following:-
i) All assets of or pertaining to the undertaking including
those specified in Schedule A hereto:-
ii) All liabilities and debts pertaining to the Undertaking
including those specified in Schedule B hereto:
iii) ….. duties and obligations of all contracts agreement
and arrangements ….
iv) …..
v) …..
vi) all necessary record files, papers, and information
…. And the records in connection with and/or relating
to the undertaking.”
Part II, Clause 3(a), (b) and (e) of the Scheme read as under:
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 14 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
With effect from the Appointed Date, the Undertaking shall,
“3(a)
pursuant to the provisions contained in section 394, of the Act,
without any further act, deed, matter or thing, be and the same
shall stand transferred to and vested in or be deemed to be
transferred to and vested in POWERCO as a going concern so as
to become the property of POWERCO with effect from the
Appointed Date, subject to -the charges existing thereon on the
Appointed Date in favour of the financial agencies and/or the
concerned secured creditors of INABB if and only if such charges
are in relation to or pertaining to the liabilities and debts of the
Undertaking. The assets and liabilities pertaining to the
Undertaking shall be transferred at their book values as on April
1,1999.
3(b) All assets pertaining to the Undertaking acquired by INABB
after the Appointed Date and prior to the Effective Date for
operations of the Undertaking shall also stand transferred to and
vested in POWERCO at their book values, upon the coming into
effect of the Scheme.
…
3(e) It is hereby clarified that the rest of the assets and liabilities
(other than those specified in Schedule 'A' and 'B'), if any, of
INABB shall continue to vest in INABB.
”
43. From these Clauses, it is quite evident that the Power division of
defendant No.1 got demerged and was taken over by defendant No.2.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 15 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
Furthermore, it was taken over as a going concern which implies that all the
existing transactions including subsisting Agreements, Contracts together
with the debts and liabilities as specified in Clause 3(e), got transferred to
defendant No.2.
44. The plaintiff has taken an objection that the scheme of Demerger is
not binding without proper service or intimation to a creditor, for which
reliance is placed on Miheer H. Mafatlal v. Mafatlal Industries Ltd (1997) 1
SC 579; Bank of India v. Official Liquidator (1999) 1 CAL LT 322(HC);
and In Re: Birla VXL [2006] 66 SCL 69 (Guj). However, in the present case,
requisite Public Notice were given for the scheme of demerger which has
been affirmed by Bombay High Court. This objection of the plaintiff is
therefore, without merit.
45. A further plea has been set up that there was no mention of this
alleged Agreement dated 15.07.1998 in the list of assets and liabilities and
therefore, there was no transfer of the obligations under this Letter dated
15.07.1998 to defendant No.2. This argument is totally not sustainable in
terms of the express Clauses, especially Clause 1(h)(ii) which defined
, thereby
liabilities as “including those specified in Schedule B hereto”
making it explicit that the liabilities were not limited but were inclusive of
Schedule B. The defendant No.2 had taken over the Power division of
defendant No.1 as a going concern which implies that all the subsisting and
existing activities pertaining to power division of defendant No.1 had been
taken over by it. The liabilities under the alleged Agreement dated
15.07.1998 were ongoing subsisting liabilities (if any) and therefore, they
along with the Power Division, got transferred to defendant No.2. To claim
that there was no mention of this particular Agreement in the list of assets
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 16 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
and liabilities, is absolutely not tenable for the simple reason that it was the
ongoing business along with all the liabilities and debts, which stood
transferred in terms of Clause 3(a)of the Scheme.
46. The first objection taken is that the liabilities if any, that were existing
against defendant No.1 did not get transferred to defendant No.2 is
completely not borne out from the record. Once the defendant No.2 took
over all the liabilities which included those arising under Agreement dated
15.07.1998, they can be enforced only against defendant No.2. Defendant
No.1 having transferred its Power division business including its liabilities if
any, under this Agreement dated 15.07.1998, it cannot be now held liable,
thereunder.
47. Pertinently, plaintiff has withdrawn its suit against defendant No.2
vide Order dated 03.08.2012. While permitting the withdrawal this Court
if any consequence flows in favour of any of the defendant on
observed that “
account of plaintiff withdrawing the suit against defendant No.2, such issue
shall be examined during the course of disposal of the suit
”.
48. The plaintiff as has been stated in the application under Order XXIII
Rule 1 CPC by its own understanding was convinced that there was no
subsisting liability against defendant No.2 which prompted it to withdraw
the suit. This may have been the understanding of the plaintiff, but the
documents and the evidence on record clearly establish that the liability, if
any, that existed under this Agreement of 15.07.1998, got transferred to
defendant No.2. Since defendant No.2 ceases to be a party to the present
suit, there survives no cause of action against defendant No.1 and the
plaintiff is not entitled to any relief.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 17 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
II. Whether any Joint Venture constituted between defendant No.1 and
NTPC came into existence:
49. Independent of this finding, the Agreement dated 15.07.1998 be
considered to understand whether any obligations in favour of plaintiff got
created. We may now examine contents of this Agreement dated
15.07.1998, the relevant parts of which read as under :
“RE: NTPC JOINT VENTURE PROPOSAL FOR R &
M THERMAL
POWER STATION
With reference to your letter dated 13th June, 1998 and
subsequent discussions you had with us on the above
subject we are pleased to engage your services for
assisting us in the preparation of the report. Collection
of relevant information and pursuing various related
matter in connection with our proposal for the
captioned project on an exclusive basis.
In the event of our entering into a suitable agreement
with NTPC, we agree to pay you upfront service charge
of Rs. 2 MINR. In addition, you shall also be required to
extend necessary professional assistance to support the
marketing efforts leading to the success of the proposed
joint Venture Company. Depending on the size of the
first 2/3 project undertaken by the proposed NTPC-
ABB (JV), for execution, additional service charge upto
Rs. 50 MINR shall be paid to you after receipt of
technically & commercially clear order, relating to these
projects Modalities of payment shall be mutually
discussed and finalised.
The above is subject to the terms & conditions
mentioned below:
You will render your services for the follow-up of
above tender on an exclusive basis for which you will
deploy sufficient manpower for follow up and discussions
from time to time
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 18 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
You will report to us periodically the developments of
the proposal and shall also communicate to us suggested
strategies.
You will maintain all the information given to you from
time to time in strict confidence and will not divulge any
part of it to other parties.”
50. The defendant No.1 engaged the services of the plaintiff for the
preparation of Report, collection of relevant material etc. on an exclusive
basis. It further stated that on entering into a suitable Agreement with
NTPC, an upfront charges of Rs. 20 lakhs shall be paid and if they were able
to get further 2-3 Projects an amount upto Rs.5 crores shall also be payable.
51. This Agreement was subject to fulfilment of the conditions by the
plaintiff that it shall render services for the follow up of Tender, shall report
periodically about the development of the proposals and suggest strategies
and shall also maintain all the information given to them from time to time
in strict confidence. The first condition, therefore, was a Joint Venture
Agreement between defendant No.1 and NTPC. It has come in evidence that
a Joint Venture got executed between ABB Kraftwerke AG, Germany and
NTPC on 10.12.1998. It is the case of the plaintiff itself that because of its
effort JV was formed between NTPC and ABB Kraftwerke AG, Germany
which is the German entity and sister concern of defendant No.1. The
plaintiff itself admits that a Joint Venture of NTPC was not with defendant
No.1 but with its German entity in which it had 100% subsidiary. It needs
no explanation that ABB German entity may be a sister concern in which
defendant No.1 had 100% subsidiary, but the fact remains that defendant
No.1 and ABB Kraftwerke AG, Germany are two independent Companies.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 19 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
52. In the case of Vodafone International Holdings BV vs. Union of India
& Anr (2012) 6 SCC 613 the Apex court has observed that the legal
relationship between a holding Company and wholly owned subsidiary is
that of two distinct legal persons, the holding Company does not own the
assets of the subsidiary and the management of business of the subsidiary
vests in its Board of Directors.
53. Merely because the Joint Venture was entered into with a German
entity of defendant No.1, it cannot be said that the foundational requirement
of there being a Joint Venture between plaintiff and defendant No.1, got
satisfied. In fact, there is not a single document to corroborate that a Joint
Venture ever came into existence between Defendant No.1 and NTPC has
been produced by the plaintiff. Rather PW.1 Sh. S. K. Sikka has made
significant admissions in his cross examination, relevant parts of which are
reproduced as under.
Further Cross dated 06.02.2013 of PW-1 Sh. S. K. Sikka:
at neither any JV agreement between
“Q. I put it to you th
ABB India and NTPC was formed nor any business
including Korba R & M or over Rs.400 Crores business
gone to alleged JV as alleged y you in para 13 of your
affidavit”
A. Whatever is written by me in para 13 is correct.
Q. Have you filed any document to show over Rs. 400
Crores business gone to alleged JV?
A. No.
Q. Can you show any document to reflect that Joint
Venture was formed between NTPC and ABB?
A. I cannot show but it is a fact. It is incorrect to suggest
that Korba project was not to go to ABB.
It is correct that Korba project went to Alstom. Vol. It
was understanding between Alstom and ABB because at
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 20 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
that time ABB was being taken over by Alstom. There is
no document regarding this understating. Vol. It was
internal matter between the two. It is incorrect that there
was no such understanding and my averments in this
regard are totally baseless and incorrect. It was within
our knowledge that Korba project was going to Alstom.
We did not raise any protest in this regard, as both ABB
and Alstom were our regular clients.
Q. Is it correct that Korba project did not go to the
alleged JV as per you but went independently to Alstom?
A. Not independently. Went to Alstom based on
understanding with ABB who were in process of
transferring power generation system to Alstom.
I do not have and I cannot have any document regarding
the said understanding. It is incorrect to suggest that
there was no such understanding.
Q. What is the basis of your averment that Korba project
was equivalent to two/three projects taken together?
A. It was based on our experience that R & M Projects
are normally smaller in size to start with.
Q. Is there any material in support of your above
averment?
A. My experience is enough.
It is incorrect to suggest that quantum of Korba project
was not equivalent to two/three projects taken together.”
Cross dated 23.02.2013 of PW-1Sh. S.K. Sikka:
Q. I put it to you that no JV came to be formed between
ABB India and NTPC?
A. It is correct Vol. ABB India had informed us that one
of the ABB Group Company will sign the agreement with
NTPC as per previous contractual practices with ABB
India for which the plaintiff rendered the services.
It is incorrect to suggest that volunteered part of my
above answer is incorrect.
Q. Have you filed any document in support of your above
volunteered statement?
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 21 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
A. I do not remember.
I cannot disclose as to who from ABB told me that one of
the ABB Group Company will sign the agreement with
NTPC.
Q. I put it to you that there was no such present or past
practice as stated by you is your above volunteered
statement.
Ans. It is incorrect.
Q. I put it to you that there was no such communication
form ABB India as stated by you in your volunteered
statement.
Ans. It is incorrect.
Q. Can you show me any document in support of
statement made by you in para 26 of your affidavit?
Ans. I cannot produce any document as on today.
It is incorrect to suggest that the contents of para 26 of
my affidavit are incorrect.”
54. There are categorical admissions by PW.1 Sh.S. K. Sikka in his
evidence that it has no documents to prove the creation of JV between the
Defendant No.1 &2 but has referred to some internal understanding between
the two of which there is no cogent evidence. PW-1 has also admitted that
the Projects went to Alstom and not to ABB, but tried to buttress it by
asserting that there was an internal understanding that ABB was going to
Alstom.
55. The plaintiff has taken a plea that ABB Kraftwerke Germany AG is
the alter ego of defendant No.1 and even in previous transaction, defendant
No.1 had paid commission on behalf of ABB Kraftwerke Germany AG for
previous transactions. However, none of these transactions have been proved
by the plaintiff. Furthermore, payment of commission per se would not
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 22 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
make ABB Kraftwerke Germany AG the alter ego of defendant No.1. This
entity is incorporated in Germany and it subsequently became ABB Alstom
Power Services Ltd. and then it became Alstom Power India Ltd. i.e.
defendant No.2 which is a totally different entity. Therefore, the allegation
of plaintiff that ABB Kraftwerke Germany AG was the alter ego of
defendant No.1 is not established.
56. Further, the plaintiff has taken a plea that the corporate veil
should be lifted to establish this fact of defendant No.1 being the alter-ego of
the German entity. For this, plaintiff has placed reliance on Arcelor Mittal
India Pvt. Ltd. vs. Satish Kumar Gupta & Ors. (2019) 2 SCC 1. to enlist
circumstances in which Corporate Veil can be lifted, which are: (i) where
the statute itself lifts the corporate veil; (ii) where protection of public
interest is of paramount importance, or (iii) where a Company has been
formed to evade obligations imposed by the law.
57. Firstly, no such plea of ABB Kraftwerke Germany AG being the alter
ego of defendant No.1 has been taken in the amended plaint. Secondly, has
observed that the corporate veil may be lifted. Secondly, in the present case,
the plaintiff has not been able to prove on record the existence of any of
such circumstances as laid down by the Apex Court in the case of Arcelor
(supra) and thus, this judgment is of little assistance to the plaintiff. There is
no evidence whatsoever in this regard.
58. It is abundantly clear from the testimony of PW-1 Sh. S. K. Sikka
that indeed no JV came into existence as has been claimed by the plaintiff.
III. Services Rendered by the Plaintiff:
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 23 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
59. Even if it is accepted that the Joint Venture between the Germany
entity which is a 100% subsidiary of defendant No.1 was sufficient to be
considered as a foundational basis for the plaintiff to raise its charges under
the Agreement, it needs to be further examined whether the plaintiff indeed
rendered its services in accordance with the three terms and conditions
which were mentioned in the letter dated 15.07.1998. The first
requirement was the follow up of the Tender on an exclusive basis for
which sufficient man power was to be deployed by the plaintiff for the
purpose of follow up and discussions from time to time. The second
requirement was to report periodically about the development of proposal
and to communicate the suggested strategies. The third requirement was
to maintain all the information given to the plaintiff from time to time in
strict confidence and not to divulge any part of it to any other parties.
60. The plaintiff in its pleadings as well as in its evidence, is blissfully
silent about any of these activities undertaken or Services rendered by it.
Not a single document has been produced to support that it had deployed
man power or there was any follow up of the Tender. No record has been
produced to establish that it had been reported periodically about the
developments or proposals or that it had suggested any strategies.
Pertinently, the plaintiff has not even alleged or produced any of the letters
or the documents forwarded to it by defendant No.1 in respect of which the
confidentiality was to be maintained. In fact, there is not a single document
to corroborate that a Joint Venture ever came into existence between
Defendant No.1 and NTPC or about the efforts of the plaintiff in facilitating
the Joint Venture to come through. The upfront payment or subsequent
payment were all contingent upon the JV being formed and the rendering of
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 24 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
services by the plaintiff for the Joint Venture to come through and thereafter
get the Projects.
61. PW1 S.K. Sikka has also been evasive in his cross-examination and
was unable to given the details of the professional services rendered by it in
terms of the Agreement dated 15.07.1998. The relevant part of cross-
examination reads as under :
Cross dated 10.12.2012 of PW-1Sh. S. K. Sikka:
“
“Q. Please explain what spade work was done by you as
mentioned in para 16 of your affidavit ?
A. We have introduced ABB Directors to concerned
persons in NTPC to Govt. authorities so that the joint
Venture Agreement can be accepted.
Q. Can you tell me name of the Directors of ABB who you
introduced as per you in NTPC to Government
authorities. Name of officials of NTPCs, Name of
Government authorities, dates when the meeting as per
you took place and documents in support thereof?
A. In view of confidentiality understanding with the
Defendant management. I cannot disclose the
information.
Q. Have you been asked by ABB in writing to not disclose
the information as stated by you? Kindly give the dates
thereof.
A. As per international practices. Such facts are not
disclosed and as such there was no written request from
ABB.
Q. Kindly tell us what Liaoning and image building work
you did with details thereof as mentioned by you in para
19 of your affidavit?
A. It cannot be explained.
It is incorrect to suggest that we did not do any liaisoning
and image building word as stated in para 19 of my
affidavit.”
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 25 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
62. The next Claim of the plaintiff is that the Projects were allotted to JV
which were of more than 400 crores which entitled him to a further payment
of Rs.5 crores. In the end, it may also be observed that the amount that was
to be paid was up to Rs.5 crores depending upon the value of the Projects.
The plaintiff has relied upon a Brochure to assert that two Contracts
namely, Korba Amarkantak Rehabilitation Projects and Project worth
Rupees 240 crores were allegedly awarded to the alleged Joint Venture
between the defendant No. 1 and NTPC, but at the same time has also
admitted that Korba Amarkantak Rehabilitation Project went to Defendant
No.2. The plaintiff has miserably failed to prove that the Projects got
allotted to the Joint Venture which could entitle it to claim additional
amount of Rs. Rs.5 crores. Furthermore, PW1 S.K. Sikka during its cross-
examination admitted that it had no documents to show that over Rs. 400
crore business has gone to alleged Joint Venture. The plaintiff in its entire
evidence, has also not been able to give any details of the quantification of
the Projects and has not been able to justify the amount of Rs.5 crores which
it is claiming. There is no calculation on the basis of which Rs.5 crores have
been claimed when in fact Rs.5 crores was a cap upto which the amount was
payable depending upon the quantification of the Joint Venture; it was not a
fixed amount.
63. PW1 S.K. Sikka has relied upon communication dated 17.03.1999
and 18.03.1999, but only the photocopies of the documents have been
produced which have been denied by defendant No.1. Even in the cross-
examination, no evidence whatsoever, has been led by the plaintiff to prove
these two Letters.
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 26 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
64. In the case of The Roman Catholic Mission vs. The State of Madras,
AIR 1966 SC 1457 and R.V.E Venkatachala Gounder vs. Arulmigu
Viswesaraswami & V.P. Temple & Another (2003) 8 SCC 752, it has been
held that photocopies even if marked as exhibit, are inadmissible in
evidence. Therefore, these two Letters relied upon by the plaintiff are of no
assistance to it.
65. Plaintiff, therefore, has admittedly neither filed any documents nor
has it adduced any cogent evidence to prove its assertions that business of
more than 400 crores went to the alleged JVC because of its efforts.
Furthermore, Korba Amarkantak Projects which had gone to defendant No.2
as per the Annual Report of defendant No.2, is not a JV. The allegation of
the plaintiff that the Korba/Amarkantak Projects got diverted to defendant
No.2 instead of JV is also totally unsubstantiated. Rather, the averments of
the plaintiff itself shows that the Project of Korba Amararkantak Project was
not a business which went to the JV Company.
66. The plaintiff had thus, miserably failed to prove that it had rendered
the services which would have entitled him to upfront payment of Rs.20
lakhs.
67. Plaintiff has relied upon Mackay v. Dick (1881) 6 App. Cas. 25 where
the House of Lords held that in a conditional contract of sale and delivery
where the buyer prevents the possibility of the seller fulfilling the condition
then the contract is to be taken as satisfied; and Secretary Dept. of Irrigation
and Ors. v. Millars Machinery Co. Ltd. 1985 KLJ 734 wherein
the Hon’ble
Kerala High Court reiterated the settled principle that if a promisor is
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 27 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
prevented by the promisee from performing his part of the contracts then the
promisor is deemed to have performed his part of the contract. These
judgements do not aid the case of the plaintiff as it is evident from the facts
of the case that the defendant No. 1 did not obstruct the plaintiff in fulfilling
the terms of the Agreement dated 15.07.1998 whereby the plaintiff agreed to
provide the defendant No. 1 with its service and expertise, and to assist it in
entering into a Joint Venture with NTPC.
68. To conclude, First and foremost, the JVC which got formed was not
between defendant No.1 and NTPC. It was between German entity of
defendant No.1 and NTPC, as has been already observed. Secondly, the
entire liabilities of defendant No.1 got transferred to defendant No.2 against
which the suit stands withdrawn. Thirdly, as has been discussed in detail
above, PW.1 has admitted in his cross examination that the Projects went to
Alstom. Fourthly, even if it is accepted that the Joint Venture Company had
got Projects of more than 400 crores, the plaintiff has not been able to
establish its contribution or the services rendered by it to the JVC in getting
these projects.
69. It is, therefore, held that in the light of above discussion, plaintiff is
not entitled to the amounts as claimed.
70. The issue No.1 is decided against the plaintiff.
Issue No.2: Whether the plaintiff is entitled to a preliminary decree for
rendition of accounts? If yes, against which defendant?
OPP
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 28 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39
71. In view of the findings on Issue No.1, the plaintiff is not entitled to
rendition of accounts.
72. The issue No.2 is decided against the plaintiff.
Issue No.3: Whether the plaintiff is entitled to interest? If yes, at what
rate and for which period. OPP
73. In view of findings on Issue No.1 and 2 the plaintiff is not entitled to
any interest.
74. The issue No.3 is decided against the plaintiff.
Relief:
75. In view of the findings above, the suit of the plaintiff is hereby
dismissed. Pending applications, if any, are also hereby dismissed.
76. Parties to bear their own costs. Decree sheet be prepared.
(NEENA BANSAL KRISHNA)
JUDGE
JUNE 28, 2024
PT/VA
Signature Not Verified
Digitally Signed CS(OS) 1180/2002 Page 29 of 29
By:VIKAS ARORA
Signing Date:12.07.2024
13:31:39