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TMI Blog2016 (4) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said agreement MGG agreed (i) to purchase 45001 shares of BOCL from RUIAS, and (ii) also to acquire another 30000 shares of BOCL from the open market which would make MGG the majority shareholder of BOCL (creating a controlling interest). Clause 6.1 of AGREEMENT-II reads; 6.1 Right of First Refusal: With effect from the date this Agreement becomes effective, neither party shall sell any shares in the Company held or acquired by it without first, offering the Shares to the other party. The offer shall be in writing and shall set out in the price and other terms and conditions. If the offeree does not agree to purchase the Shares so offered the offerer shall be free to sell the Shares to any person (other than a competitor of the offeree), but at the same price and on the same terms as offered to the offeree. This right of first refusal does not apply to any sale of shares by the purchaser to a company of the Hoechst Group. In a company directly or indirectly controlled by or under direct or indirect common control with the Hoechst Group. For the purposes of this definition control means ownership, directly or indirectly or more than 50 percent of the issued and out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporation Ltd. in violation of the non-competition clause of the agreement dated 12.5.1995 and/or (d) A decree of permanent injunction restraining the defendant from acquiring any shares in Bombay Oxygen Corporation Ltd. on its own and without the participation of plaintiff. On 14.9.1998, GGL filed two applications seeking certain interim orders. I.A. No.7248 of 1998 in the SUIT-I invoking Order 39 Rule 1 2 of the Code of Civil Procedure, 1908 (hereinafter referred to as CPC ) and OMP No. 205 of 1998 invoking Section 9 of the Arbitration Conciliation Act, 1996 (hereinafter referred to as A C Act ). Interestingly the relief sought in both the applications is substantially the same i.e., interim order restraining the MGG from acquiring the shares of BOCL on its own. The learned trial Judge dismissed both the applications by two separate orders dated 22.9.1998. GGL carried the matter in intra court appeals. 7. By the appellate order dated 23.10.1998, a Division Bench of the Delhi High Court restrained For the aforesaid reasons, we allow both the appeals and restrain Messer from taking any steps to acquire shares of BOCL in pursuance of Share Purchase Agreement dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s so decide. We direct that all the disputes between the parties including the right to represent on the board of Bombay Oxygen will now have to be decided by the Arbitrators. If any necessity arises to approach this court, it will be open to the parties to do so. Till any order to the contrary is passed by the Arbitrators, our order dated 22.1.99 will continue to operate. The appeals are disposed of accordingly. 10. The petitioner (hereinafter referred to as MHL ) in SLP(C) Nos.33429-33434 of 2010 on hand is a company incorporated in British Virgin Islands on 20.01.2000 by MGG and another company known as Morgan Trade and Commerce which is a 100% owned subsidiary of GGL. The authorised share capital of MHL is 10,000,000 DM (currency of Federal Republic of Germany) divided into 10,000,000 shares. It has two Directors, one representing MGG and the other Morgan Trade and Commerce. Interesting feature of MHL is that the shares of this company are bearer shares. It is an admitted case of all the parties that the law of British Virgin Islands permits it. 11. MGG and GGL entered into a settlement It is stated in the IAs No.17-18 of 2000 regarding the settlement as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the prayers in I.As 17 18 of 2000 were not pressed The whole process is strange. GGL simultaneously pursued the remedies (Suit-I and an arbitration proceeding) for the resolution of the dispute with MGG when the parties to the suit settled their dispute by mutual agreement, there is no need to approach this Court by filing interlocutory applications in appeals which had already been disposed off. More particularly, when those appeals arose out of interlocutory proceedings (i) in a pending suit, and (ii) a proceeding under Section 9 of the A C Act, 1996 which empowers the civil court to pass appropriate orders as an interim measure for protecting the interests of parties to a dispute which the parties had agreed to get resolved by an arbitration. If really the dispute between the parties is settled, nothing prevented the plaintiff (GGL) from either withdrawing the suit or praying for a decree in terms of the settlement between the parties, or in the alternative, praying the arbitrators to pass an award in terms of the settlement between the parties, because under the A C Act, 1996 an award is as efficacious as a decree of a civil court. But the parties i.e, MGG and GGL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstance seeking enforcement of clause 6.1 of the AGREEMENT-II. (a)1(i) that it be declared that the negative covenant contained in Clause 6.1 of the agreement dated 23rd June 1997 being Ex. B hereto is binding on the Defendants; (a)1(ii)(b) that the Defendants by themselves their agents and servants be restrained by a perpetual order and injunction of this Hon ble Court from (i) committing breach of clause 6.1 of the Agreement dated 23rd June, 1997 being Ex. B hereto; (ii) transferring or selling or alienating the legal and/or beneficial interest in the shares of Defendant No. 2 including those mentioned in Ex. A hereto without first offering the same to the Plaintiffs in terms of Clause 6.1 of the Share Purchase Agreement dated 23rd June 1997, being Ex. B hereto. (iii) obtaining any award, decree order from any forum or court in violation of clause 6.1 of the Share Purchase Agreement dated 23rd June 1997 being Ex. B hereto. (iv) making any claim before the Arbitrators or any court which if granted will amount to a breach or violation of the provisions of Clause 6.1 of the said Share Purchase Agreement dated 23rd June 1997, being Ex. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OCL to MHL tantamounted to breach of clause 6.1 of AGREEMENT-II. 16. After obtaining the consent award on 21.9.2000, MGG filed an application (Notice of Motion No.2933/2000) before the Bombay High Court in SUIT-II seeking leave of the Court to implement and enforce the consent award. SUIT- III IN THE HIGH COURT OF BOMBAY 17. On 5.2.2001, RUIAS filed second Suit bearing No.509 of 2001 (hereinafter referred to as SUIT- III ) before the Bombay High Court praying: a) for a declaration that the Share Purchase Agreement dated 23rd June 1997 is liable to be rescinded; b) for an order of this Hon ble Court directing the said Share Purchase Agreement dated 23rd June 1997 be rescinded; c) that in the alternative to prayers (a) and (b) above, for a declaration that the Share Purchase Agreement dated 23rd June 1997 was voidable and has been validly avoided by the Plaintiffs; d) that in the alternative to prayers (a), (b) and (c) above, for a declaration that the Share Purchase Agreement dated 23rd June 1997 was terminable by the Plaintiffs and has been validly terminated by the Plaintiffs. e) that in the alternative to prayers (a), (b), (c) and (d) above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets of BOCL on the ground that RUIAS are causing substantial damage to the assets of BOCL. 19. SUIT-II was amended from time to time on three occasions pursuant to the orders of the Bombay High Court dated 22.02.2000, 04.10.2002 and 08.06.2011. The prayer in SUIT-II after such Amendments; Rider-I(a) (a) (i) For a declaration that the acquisition of the said 30,000 shares pursuant to the public offer is illegal, null and void ab-initio and of no legal effect whatsoever. (ii) For a permanent order and injunction restraining the defendants from exercising any rights in respect of the said 30,000 shares including and in particular voting rights. (b) (i) for a declaration that the said agreement dated 23rd June, 1997 (Exhibit B hereto) stands validly terminated and/or avoided. Rider-N Prayer (b)(ii)(a) (b)(ii)(a) that it be declared that Defendant Nos. 3 to 5 have no right, title or interest of any nature whatsoever in respect of the 75001 shares of Defendant No. 2 Rider O prayer (b)(ii)(b): (b)(ii)(b), that in the alternative to prayer (b)(ii) this Hon ble Court be pleased to order and direct the Defendant Nos. 1 and 3 to 5 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are Purchase Agreement dated 23rd June, 1997 being Ex. B hereto. (iv) making any claim before the Arbitrators or any court which if granted will amount to a breach or violation of the provisions of Clause 6.1. of the said Share Purchase Agreement dated 23rd June 1997, being Ex. B hereto; (v) procuring any breach of the provisions of clause 6.1 of the said share Purchase Agreement dated 23rd June, 1977 being Ex. B hereto; Rider-C (b1)(a) In the alternative and in the event of prayer (b) not being granted and In the event of it being held that the said agreement is void defendant Nos. 1, 4 and 5 be ordered and decreed to deliver/return to the respective Plaintiffs the said 45001 shares together with all accretions thereto from 23rd June 1977 on such terms of this Hon ble Court may direct. (b) For the purpose aforesaid defendant Nos. 1, 4 and 5 be ordered and decreed to do and perform all acts, deeds, matters and things and to execute all documents, deeds and writings in furtherance thereof. 20. It appears that on 5.12.2002, RUIAS and MGG entered into a settlement (evidenced by an agreement in writing) of the disputes between them by allegedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in connection therewith and shall refrain from doing anything inconsistent with the foregoing or the rights reverted/assigned/transferred as above on and from the date of execution hereof. To this end and purpose, an irrevocable Power of Attorney duly executed as per draft enclosed herewith as Annexure I shall be put in escrow with Ms. Lira Goswami, Advocate. Ms. Lira Goswami shall hand over the Power of Attorney to the Ruias in accordance with written escrow instructions agreed to by Ruias and MGG . 11(a) The parties confirm and acknowledge that as the foregoing 45,001 shares of BOCL have not been registered in the name of MGG in the records of BOCL , the said shares continue to be registered in the names of the Ruias . Consequently, the rescission of the Ruia Agreement does not involve any transfer from MGG to the Ruias in the books of BOCL as the Ruias continue to be the registered shareholders. Nevertheless, if any permission, approval or notification is required under Indian law for implementing this Agreement, including without limitation, the permission of the RBI for making the payment of US $ 154,642, the Ruias shall be solely responsible and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above-mentioned Development Agreement along with various other reliefs (the details of which are not necessary for the present). 24. By an order dated 30th April, 2008, a Division Bench of the Bombay High Court while adjourning the hearing of the said Notice of Motion recorded the undertakings on behalf of the HDIL that it will not claim any equity whatsoever in the event of MHL s success in the above-mentioned Notice of Motion and demolish the construction, if any, made during the pendency of the proceeding by the HDIL. It was also stated by them that the property which was the subject matter of the Development Agreement had already been mortgaged in favour of the Union Bank of India, however, undertook not to create any 3rd party rights in the said property. 25. Aggrieved by the said order, MHL filed SLP No. 12734 of 2008 in this Court on 8.5.2008. By an Order dated 16.5.2008, this Court, while issuing notice on the said SLP granted an order of status quo regarding the nature, title, etc. of the property in dispute. By an Order dated 23.6.2008, the said SLP was disposed of directing that the status quo order granted earlier on 16.5.2008 shall continue during the penden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the powers of attorney dated 05.02.2008 (Exhibit NN OO hereto) are illegal, null and void and of no legal effect; for cancellation and this Hon ble Court be pleased to cancel the same; x) That this Hon ble Court be pleased to declare that the purported mortgage Deed dated 23.3.2008 at Exhibit XX hereto said to have been created by Defendant No.12 in favour of Defendant No.13 is illegal, null and void and of no legal effect; y) That this Hon ble Court be pleased to direct Defendant Nos.1 to 10, 12 and 13 to deliver up the said deed of mortgage dated 23.3.2008 at Exhibit XX hereto or cancellation and this Hon ble Court be pleased to cancel the same; z) That this Hon ble Court be pleased to Order and decree Defendant nos.2 to 10 to jointly and severally pay to the Plaintiff, damages/compensation in the sum of ₹ 500 crores as per the Particulars of Claim annexed herewith as Exhibit ZZ along with interest thereon at the rate of 18% per annum from the date of the suit till payment and/or realisation; We understand that none of the defendants have filed their written statements and no issues are framed so far. 27. It is in the background of the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter of appeals no.840, 841 and 857 of 2003 is order dated 26.03.2003 of the Single Judge in Notice of Motion Nos.3230/2000 1231/2003 in SUIT-II and Notice of Motion No.392/2001 in Suit III. Both the abovementioned Suits were filed by RUIAS. 31. SUIT-I is admittedly withdrawn, therefore, any order passed during the pendency of the said suit by any court (including this Court) in any proceeding arising out of the said suit automatically lapses with the withdrawal of the suit. A logical consequence flowing from such lapsing of the orders is that any act or omission of any party to the said suit, either in pursuance of or in obedience to such interlocutory orders would be without any legal efficacy. 32. SUITS II and III filed by the RUIAS are pending as of today. The Substance RUIAS amended the said suits from time to time we find it a little difficult to understand the legality and the purpose of the SUIT-II and its amendment subsequent to the filing of the SUIT-III We do not wish to examine those questions as such enquiry would be purposeless at this stage in view of the subsequent developments. of SUIT-II is that RUIAS do not want MGG to transfer any of the shares of BOCL ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not entered in the registers of BOCL as the holders of the share because of the various interim orders mentioned earlier. 34. However, GGL and MHL dispute the title of MGG to the said 75001 shares. According to GGL and MHL, by the settlement dated 5.12.2002 MGG had itself lost its title over the said shares as it had already transferred its title in the said shares in favour of MHL pursuant to the consent award dated 21.9.2000. 35. The existence of title in MGG in the said 75001 shares cannot be disputed by either GGL or MHL, at least, till the date of the consent award, i.e. 21.9.2000 because GGL and MHL s claim for title over the said shares flows from MGG s prior title and the subsequent alleged transfer pursuant to the consent award. In such a case, because of MGG s purported transfer of the title in the 75001 shares to RUIAS under the settlement dated 5.12.2002, RUIAS should normally be entitled to have their names entered into the records of BOCL as holders of the said shares by following appropriate procedure. If either GGL or MHL is objecting to the right of MGG to effect the said transfer in favour of RUIAS, they must establish a superior title (to MGG) in the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 5.12.2002 knowing fully well that MGG was not going to give custody of the above-mentioned 75001 shares, purported to purchase the said shares and agreed not to prosecute the SUITS-II and III against MGG. In such a case, continuing the suits either against GGL or MHL or its agents etc. only for the custody of the shares, in our opinion, is without any cause of action on the part of the RUIAS. The prayers in SUIT-II and III in this regard are: (ii) that the 1st defendant Nos. 1, 3, 4 and 5 be ordered and decreed to deliver/return to the respective plaintiffs the said 45,001 75,001 shares together with all accretions thereto from 23rd June, 1997 on such terms as this Hon ble Court directs. - SUIT- II j) that the 1st defendant be ordered and decreed to deliver/return to the respective plaintiffs the said 45,001 shares together with all accretions thereto from 23rd June 1997 on such terms as this Hon ble Court directs. - SUIT-III i.e. for a declaration in favour of RUIAS that they are entitled to the recovery of 75001 shares jointly against MGG, GGL and MHL etc. RUIAS having agreed not to prosecute the suits against MGG cannot continue the suits against o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is were the court of first instance trying these various suits. 42. The examination of various questions raised by the petitioners in these SLPs, in our opinion, is wholly uncalled for in the abovementioned factual background. 43. 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 unscrupul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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