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2016 (4) TMI 757 - SC - Indian LawsChance of the suit succeeding - transfer of shares - Held that - A proceeding being filed for a collateral purpose, or a spurious claim being made in litigation may also in a given set of facts amount to an abuse of the process of the court. Frivolous or vexatious proceedings may also amount to an abuse of the process of the court especially where the proceedings are absolutely groundless. The court then has the power to stop such proceedings summarily and prevent the time of the public and the court from being wasted. Undoubtedly, it is a matter of the court s discretion whether such proceedings should be stopped or not; and this discretion has to be exercised with circumspection. It is a jurisdiction which should be sparingly exercised, and exercised only in special cases. The court should also be satisfied that there is no chance of the suit succeeding. dismissed and accordingly dismissed. Consequently, all the interim orders passed by the various Courts (including this Court) earlier in proceedings arising out of the said two suits lapse. We also declare that all interim orders passed by any Court in any proceeding arising out of SUIT-I also lapsed in view of the withdrawal of the suit by GGL. Therefore, these SLPs filed by MHL and GGL purportedly aggrieved by the impugned orders passed in the various applications filed in the two suits filed by RUIAS become infructuous. Therefore, the said SLPs arising therefrom are dismissed. The consequent factual position would be that the legal rights acquired (whatever they are) by MGG in 45001 shares of BOCL purchased from RUIAS pursuant to AGREEMENT-II should revert back to RUIAS unless it is found that the purported transfer of 45001 shares by MGG pursuant to the consent award dated 21.09.2000 in favour of MHL created any right or interest in favour of MHL. Such a claim of MHL can only be examined in SUIT-IV filed by MHL. Another 30000 shares were acquired by MGG from the public pursuant to AGREEMENT-II MGG purported to transfer them by virtue of the settlement dated 05.12.2002 in favour of RUIAS. If either GGL or MHL has any claim over those shares, such a claim must be made and established by them in accordance with law, but not in the suits filed by RUIAS. In order to establish such a claim, MHL already filed SUIT-IV to which both GGL and MGG are parties apart from Goyals and others. However, in the absence of any legally established title as on today to the abovementioned shares in any party other than MGG Even MGG s claim was that they had only a beneficial interest in the said shares, as the shares were never registered in the name of MGG., whether RUIAS would be entitled pursuant to the settlement dated 05.12.2002 to have their names entered into the registers of the BOCL as holders of the said shares is a matter for RUIAS to explore There is no prayer in the Suits II and III seeking the declaration of title of RUIAS based on the settlement dated 05.12.2002 - for that matter, there is no whisper about the said settlement . However, such an entitlement if any should be subject to the result of the SUIT-IV. We make it clear that we are not deciding by this order, the existence or otherwise of any right or its enforceability in the 75001 shares of BOCL in favour of either MHL or GGL. It is open to them to establish their right in SUIT-IV. The defendants in the SUIT-IV are at liberty to raise every defence available in law and fact to them. A great deal of effort was made both by RUIAS and MGG to convince the court that in view of the protracted litigation between the parties this court should examine all the questions of rights, title and interest in these shares between the various parties as if this were the court of first instance trying these various suits. The examination of various questions raised by the petitioners in these SLPs, in our opinion, is wholly uncalled for in the abovementioned factual background. The net effect of all the litigation is this. For the last 18 years, the litigation is going on. Considerable judicial time of this country is spent on this litigation. The conduct of none of the parties to this litigation is wholesome. The instant SLPs arise out of various interlocutory proceedings. Arguments were advanced on either side for a period of about 18 working days as if this Court were a Court of Original Jurisdiction trying the various above-mentioned suits. The fact remains that in none of the suits even issues have been framed so far. The learned counsel appearing for the parties very vehemently urged that there should be a finality to the litigation and therefore this Court should examine every question of fact and law thrown up by the enormous litigation. We believe that it is only the parties who are to be blamed for the state of affairs. This case, in our view, is a classic example of the abuse of the judicial process by unscrupulous litigants with money power, all in the name of legal rights by resorting to halftruths, misleading representations and suppression of facts. Each and every party is guilty of one or the other of the above-mentioned misconducts. It can be demonstrated (by a more elaborate explanation but we believe the facts narrated so far would be sufficient to indicate) but we do not wish to waste any more time in these matters. This case should also serve as proof of the abuse of the discretionary Jurisdiction of this Court under Article 136 by the rich and powerful in the name of a fight for justice at each and every interlocutory step of a suit. Enormous amount of judicial time of this Court and two High Courts was spent on this litigation. Most of it is avoidable and could have been well spent on more deserving cases. We therefore, deem it appropriate to impose exemplary costs quantified at ₹ 25,00,000.00 (Rupees Twenty Five Lakhs only) to be paid by each of the three parties i.e. GGL, MGG and RUIAS. The said amount is to be paid to National Legal Services Authority as compensation for the loss of judicial time of this country and the same may be utilized by the National Legal Services Authority to fund poor litigants to pursue their claims before this Court in deserving cases.
Issues Involved:
1. Breach of Non-Competition Clause 2. Right of First Refusal 3. Acquisition and Transfer of Shares 4. Arbitration and Settlement Agreements 5. Legality of Subsequent Agreements and Transfers 6. Abuse of Judicial Process Detailed Analysis: 1. Breach of Non-Competition Clause: MGG entered into a Share Purchase and Cooperation Agreement (AGREEMENT-I) with GGL, which included a non-competition clause. GGL protested MGG's acquisition of BOCL shares, claiming it breached this clause. The clause stipulated that GGL had the right of first refusal for any business opportunity in the gas sector in India. The dispute led to multiple legal proceedings, including SUIT-I filed by GGL for enforcement of Clause 9.1 of AGREEMENT-I. 2. Right of First Refusal: AGREEMENT-II between MGG and RUIAS included a right of first refusal clause, preventing either party from selling shares without offering them to the other party first. RUIAS filed SUIT-II to enforce this clause, seeking to prevent MGG and GGL from transferring shares without first offering them to RUIAS. The High Court of Bombay issued interim orders to restrain MGG and GGL from breaching this clause. 3. Acquisition and Transfer of Shares: MGG acquired 75001 shares of BOCL, initially intending to transfer 50000 shares to GGL under AGREEMENT-III. However, RUIAS objected, leading to the termination of AGREEMENT-III. Subsequently, MGG acquired all 75001 shares independently. The shares were later transferred to MHL, a joint venture between MGG and GGL, as part of a settlement. RUIAS claimed this transfer breached AGREEMENT-II and sought to rescind the agreement and reclaim the shares. 4. Arbitration and Settlement Agreements: The disputes between MGG, GGL, and RUIAS led to arbitration proceedings. A consent award was issued, transferring the 75001 shares to MHL. Later, MGG and RUIAS reached a settlement agreement on 5.12.2002, rescinding AGREEMENT-II and transferring MGG's interest in the shares back to RUIAS. This settlement led to further legal disputes regarding the validity and enforceability of the transfers and the consent award. 5. Legality of Subsequent Agreements and Transfers: RUIAS continued to pursue legal action despite the settlement, filing SUIT-III to declare AGREEMENT-II void and reclaim the shares. MHL filed SUIT-IV to establish its ownership of the 75001 shares, challenging the settlement between MGG and RUIAS. The Supreme Court noted that the legality of these subsequent agreements and transfers must be determined in SUIT-IV. 6. Abuse of Judicial Process: The Supreme Court criticized the prolonged litigation and the conduct of the parties, noting that the litigation had consumed significant judicial resources. The Court observed that the parties had engaged in misleading representations and suppression of facts, leading to an abuse of the judicial process. The Court dismissed the SLPs filed by MHL and GGL, declaring that the interim orders in SUITS II and III had lapsed and imposing exemplary costs on the parties for wasting judicial time. Conclusion: The Supreme Court dismissed the SLPs, emphasizing that the disputes over the 75001 shares of BOCL should be resolved in SUIT-IV. The Court imposed costs on the parties for abusing the judicial process and wasting judicial resources. The legal rights to the shares and the enforceability of the settlement agreements will be determined in subsequent legal proceedings.
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