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HONOURABLE SRI JUSTICE P.NAVEEN RAO
&
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
APPEAL SUIT NO.1573 OF 2018
Date: 14.03.2023
Between:
M/s.Price Waterhouse,
a Partnership firm registered with the
Institute of Chartered Accountants of India
bearing Registration No.007568S
having its Branch Office at 8-2-293/A/1131A,
Road No.36, Jubilee Hills, Hyderabad
and Head Office at 'The Millennia', 5th Floor,
Tower D, 1 and 2 Murphy Road,
Ulsoor, Bangalore, through its duly authorized
Partner Mr. N.K.Varadarajan, s/o.A.N.Krishnan,
Aged 50 years, R/o. Hyderabad.
..... Appellant/
Plaintiff
and
Satyam Computer Services Limited,
through its Company Secretary
Unit 12, Plot 35 & 36, Hitech City
Layout, Survey No.64, Madhapur,
Hyderabad, and others.
.....Respondents/
Defendants The Court made the following:
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HONOURABLE SRI JUSTICE P.NAVEEN RAO & HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA APPEAL SUIT NO.1573 OF 2018 JUDGMENT: (Per Hon'ble Sri Justice P Naveen Rao) Heard learned senior counsel Sri Sunil B.Ganu for appellant, learned senior counsel Sri K.Vivek Reddy for first respondent and learned senior counsel Sri V.Ravinder Rao for second respondent.
2. On 07.01.2009 Sri B.Ramalinga Raju, the then Chairman-cum- Managing Director of the then Satyam Computer Services Limited (for short 'SCSL') released a letter addressed to the Board of Directors of SCSL revealing for the first time the financial mismanagement and several illegalities in operations of SCSL. The Price Water House, the plaintiff in O.S.No.43 of 2012 was the statutory auditor to SCSL from April 2000 to February 2009.
3. According to plaintiff, the letter written by Sri Ramalinga Raju was shocking. However, it did not provide any details whatsoever, regarding deep complexity of the scheme, the then Chairman cum Managing Director and other Directors were orchestered. The Regularity Authorities had to conduct detailed investigation spread over three years to unearth the deep fraud committed by the Directors of SCSL.
4. As assessed by these Authorities, the complexity of the fraud far exceeds the confession in the letter dated 07.01.2009. According to 3 plaintiff, the fraud committed by the then Managing Director and other Directors range from creation of false invoices, invention of customers, creation of false bank records, summary of false financial records and reporting, so on. Plaintiff alleges that the defendant forged the books and deceived the plaintiff to conceal the fraud. As a result of the fraud, perpetrated by the defendants on the plaintiff and due to their deceitful conduct, the professional practice and services rendered by the plaintiff to the clients in India and abroad has been severely affected, causing loss of clients and profits, suffered irreparable commercial damages on ongoing basis since the initial confession of Sri Ramalinga Raju. Even the ability to attract new clients has been severely impacted resulting in further commercial losses.
5. The plaintiff filed O.S.No.43 of 2012 in the Court of VIII Additional District Judge, Ranga Reddy at L.B. Nagar praying to pass judgment and decree in favor of plaintiff and against defendants jointly and severely for a minimum sum of 100 crores together with interest at the rate of 18% per annum from the date of judgment and decree till the payment or realization.
6. The then Chairman-cum-Managing Director Sri Ramalinga Raju is arrayed as 2nd defendant and other Directors as defendant Nos.3 to 7. The SCSL is arrayed as 1st defendant.
7. On cause of action, according to plaintiff, the complex and elaborate nature of the fraud announced by Sri Ramalinga Raju 4 became clearer over a prolonged period of time pursuant to in-depth investigations carried out into this fraud by the investigating and regulatory authorities during the ensuing months since January, 2009, and that the suit is filed within three years.
8. In the suit the 2nd defendant filed I.A.No.3540 of 2012 under Order VII Rule 11(d) of CPC to reject the plaint on the ground of limitation as suit was not filed within one year of discovery of alleged fraud and cause of action arose on 07.01.2009.
9. In I.A.No.3540 of 2012 the trial Court held that as plaintiff came to know of the fraud committed by 2nd defendant on 07.01.2009 under Section 17(1)(a) the period of limitation would begin to run from that date and the suit ought to have been filed within one year from 07.01.2009 whereas, suit was filed on 07.01.2012 and therefore, clearly barred by limitation. Holding so, allowed the IA., and rejected the plaint.
10. Learned senior counsel Sri Sunil B.Ganu would contend that the letter of 2nd defendant dated 07.01.2009 does not contain full details. It was the staring point to probe into the alleged fraud and its ramifications. The fraud is of very complex nature. The Regulatory Authorities and the plaintiff were investigating into the fraud for the last three years before filing the suit to unearth the extent of fraud committed by the defendants and then only the suit could be filed. According to learned senior counsel, trial Court erred in applying Section 17(1) of the Limitation Act, 1963 (for short 'Act, 1963'). The 5 said provision has no application. As no other Article deals with situation as in this case the residuary provision in Article 137 of the Act, 1963, would apply and suit was filed within time.
11. Having regard to the provisions of the Act, 1963, law on the subject and the facts of the case, we are of the opinion that the trial Court erred in rejecting the plaint. Learned senior counsel Sri V.Ravinder Rao and Sri Vivek Reddy, fairly submit that the suit plea is not hit by limitation. However, learned senior counsel Sri V.Ravinder Rao requests the Court to leave open the issue of fraud to be urged in the suit.
12. Having regard to the fair submissions of the learned senior counsel, the decision under appeal is set-aside and the suit is restored. Accordingly, the Appeal is allowed. No costs. Miscellaneous applications, if any pending, stands closed.
___________________________ P.NAVEEN RAO, J ___________________________ NAGESH BHEEMAPAKA, J Date: 14.03.2023 Kkm/tvk 6 HONOURABLE SRI JUSTICE P.NAVEEN RAO & HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA APPEAL SUIT NO.1573 OF 2018 Date: 14.03.2023 Kkm/tvk