9911796707
|
Home
Issues Involved:
1. Entitlement to the amount claimed by the plaintiffs. 2. Applicability of the arbitration clause and jurisdiction of the court. 3. Conditional leave to defend the suit. Issue-wise Detailed Analysis: 1. Entitlement to the Amount Claimed by the Plaintiffs: The plaintiffs filed a Summary Suit based on a Memorandum of Understanding (MOU) dated 20-2-1996, which involved procuring public subscription for 46,60,000 equity shares. The MOU stipulated payment terms, including a fee of 17.50% amounting to Rs. 89,70,500, divided into three instalments. The plaintiffs claimed that the public issue was fully subscribed, entitling them to Rs. 62,79,350, which the defendants failed to pay. Despite serving notices and presenting cheques, the payment was not honored. The defendants argued that they procured the subscription due to the plaintiffs' failure and thus, the plaintiffs were not entitled to the amount. However, the court found no merit in the defendants' claim, noting that the defendants did not provide any evidence or correspondence to support their contention. The court concluded that the plaintiffs were entitled to the amount as per the MOU, and the defendants' defense was an afterthought to avoid payment. 2. Applicability of the Arbitration Clause and Jurisdiction of the Court: The defendants contended that the MOU contained an arbitration clause, and the plaintiffs should have resorted to arbitration. They argued that under Section 8 of the Arbitration & Conciliation Act, 1996, the court should refer the parties to arbitration. The court examined the requirements of Section 8, which mandates a judicial authority to refer parties to arbitration if an application is made before submitting the first statement on the substance of the dispute and is accompanied by the original arbitration agreement or a certified copy. The court noted that the defendants neither filed an application nor submitted the required documents. The court referred to previous judgments, including the Apex Court's decision in P. Anand Gajapathi Raju v. P.V.G. Raju, which emphasized the necessity of a written application to invoke the arbitration clause. Therefore, the court rejected the defendants' contention, stating that there was no basis to suo motu refer the parties to arbitration. 3. Conditional Leave to Defend the Suit: Considering the judgment of the Apex Court in Mechalec Engineers Manufacturers v. Basic Equipments Corpn., the court granted conditional leave to the defendants to defend the suit. The defendants were required to deposit Rs. 60 lakhs within eight weeks, with the plaintiffs allowed to withdraw the amount upon furnishing a bank guarantee. This decision was in line with the court's view in Suraj Sanghi Finance Ltd. v. Credential Finance Ltd., which allowed withdrawal of the deposited amount against security or bank guarantee as a condition for granting leave to defend. Conclusion: The court concluded that the plaintiffs were entitled to the claimed amount as per the MOU, rejected the defendants' argument for arbitration due to non-compliance with Section 8 requirements, and granted conditional leave to defend the suit based on the deposit of Rs. 60 lakhs. The suit was transferred to the list of commercial causes, with further procedural directions for filing written statements and completing discovery and inspection.
|
