9911796707
TMI Blog2005 (5) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... as not challenged the award and has accepted the award. Therefore, the only question to be considered is were the Arbitrators justified in holding that the respondent Nos.2 to 5 are not jointly and severally liable alongwith the respondent No.1 for the amounts for which award has been made because though the respondent Nos.2 to 5 are shareholders of the respondent No.1 Company, they are also its Directors. In order to appreciate the case of the petitioners, if one refers to the statement of claim, it reveals that in paragraphs 18 and 19, the case of the petitioners was that the respondent No.1 Company was nothing but a glorified partnership of respondent Nos.2 and 3, which is run by respondent Nos.2, 3 and 5 and therefore, they are joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent No.1 Company is incorporated solely for fraudulently conducting the business of the Respondent Nos.2 and 3 and thus avoid liability under the garb of limited Company. The applicant entered into the said transaction for and on behalf of the Respondent No.1 Company in terms of the instructions received from the Respondent No.2. As such all the Respondents are jointly and severally liable to pay the applicant, amount as more particularly set out in the particulars of claim hereto. The applicant craves leave to refer to and rely upon various judicial pronouncement by the Apex Court as well as High Courts wherein the Courts have lifted the Corporate veil and have held the directors / shareholders personally liable for the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have not disclosed information regarding the formation, shareholding and administration of the respondent No.1 Company which was within their knowledge and therefore, they were under a duty to disclose that before the Arbitrators. It is further to be seen here that the petitioners in paragraph 13 had in terms referred to a statement of respondent No.2 which recorded in the enquiry before the SEBI. Paragraph 13 of the statement of claim reads as under:- was 13. The Respondent No.2 in a statement given by him on oath to SEBI has inter alia, admitted that he had carried on the trades in the script of Cyberspace for and on behalf of Mr Johri and/or Century Consultants. A copy of the said statement is annexed hereto and marked as Exh. U . B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m refund from the respondents. Perusal of the reply shows that the respondent No.2 did not deny that he made the statement on which reliance was placed by the petitioners. Perusal of the relevant part of the statement on oath made by the respondent No.2 before the SEBI shows that in answer to para 1, the respondent No.2 states that :- Q.1 : Please identify yourself. Ans.: I am shri Rajendra Mehta, one of the Directors of Rosewood Tradelinks Pvt.Ltd., Pradeepak Finance and Management Consultants Pvt. Ltd. and Shivam Multi Services Pvt.Ltd. The other director is Sri Harshad Shah. These three companies are group / associate companies. My residential address is A-36, Roop Darshan, Juhu Lane, New India Colony, Andheri (West), Mumbai 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the respondent Nos.2 to 5 also for the sole reason that the respondent No.1 is a corporate entity and the dealings were between the petitioners and the respondent No.1. In my opinion, the Arbitral Tribunal was not justified in declining to examine the case put up by the petitioners that the respondent No.1 was only a glorified partnership of which the respondent Nos.2 to 5 were shareholders and Directors, they were using the corporate entity of the respondent No.1 to deny their liability. In my opinion, the Arbitral Tribunal had the jurisdiction to examine the case put up by the petitioners whether the respondent No.1 though incorporated as a Private Limited Company, was in truth and substance, a glorified partnership and the respon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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