whether two different cases against two different companies under the same group can be clubbed together?

RAHEJA BUILDERS PVT LTD V. RATHI FERROUS TRADING P LTD [DEL] FAO (OS)
624 of 2010 Vikramajit Sen & Mukta Gupta, JJ.[Decided on 12/11/2010]
Civil Procedure Code – Section 24 – Two different cases against two different companies under the same group – Whether suits to be clubbed and tried together – Held, No.

Brief facts : M/s. Rathi Steels Ltd., a company incorporated under the Companies Act filed a Suit against M/s. Raheja Developers Pvt. Ltd. a company also incorporated under the Companies Act under Order XXXVII for recovery of a sum of ‘29,81,601/- in this Court being CS (OS) No.2481/2009. Yet another Suit was filed by M/s. Rathi Ferrous Trading Pvt. Ltd., the Respondent herein against M/s. Raheja Builders Pvt. Ltd. both being companies duly incorporated under the Companies Act under Order XXXVII for recovery of a sum of ‘11,48,058/- before the District Judge, Karkardooma Courts, Shahdara, New Delhi. The appellant filed a transfer petition under Section 24 of the CPC seeking transfer and thus clubbing of two Suits for being tried together, by two different companies though under the same flagship pending in different Courts. The Single Judge dismissed the petition against which an appeal was preferred to the Division Bench. It is contended by learned counsel for the Appellant that the parties in both the Suits are the same being the same group companies and the dispute in the two suits is as regard the supply of HSD Bars to the Appellant group companies, thus in the interest of both the parties these Suits should be tried together in this Court.

Decision : Appeal dismissed with costs.

Reason : CS (OS) 2481/2009 filed in this Court under Order XXXVII CPC was on 1st June, 2010, ordered to be tried as an ordinary Suit and thus will now have to undergo the normal rigors of the trial. Apparently, it is this decision of this Court to try CS (OS) 2481/2009 as an ordinary Suit which prompts the Appellant to file the Transfer Petition. The Appellant being the Defendant in the two suits seeks the transfer of the Suit pending before the learned Additional District Judge being Suit No.43/2009 titled as “M/s Rathi Ferrous Trading Pvt. Ltd. v. Raheja Builders Pvt. Ltd.”, to this Court and to be tried and disposed of along with CS (OS) 2481/2009 titled as “Rathi Steel Trading v. Raheja Developers Ltd.” by way of this Transfer Petition under Section 24 of the CPC in August, 2010. Not only is the exercise of the Appellant seeking withdrawal and transfer of the Suit No. 43/2009 to this Court mala fide but also impermissible in law.

The contention of the Appellant that the parties in the two Suits are the same is erroneous and contrary to the law. A company duly incorporated under the Companies Act is a distinct legal entity. The commonality of the flagship does not change the legal status. The claims also cannot be said to be the same. Each transaction of supply of goods is an independent cause of action and thus cannot call for clubbing of the Suits. Each case of transfer of a suit under Section 24 of the CPC is to be decided on the facts particular to that case. Normally suits in respect of the same property between the same parties should be tried by the same Court in order to avoid conflicting decisions. However, in the present case parties are different, the cause of action is different, thus there being no commonality of issues. No case for transfer of the suit under Section 24 CPC is made out.

Published in Chartered Secretary Dec 2010 - ICSI)