IMPORTANT POINTS
In the event of withdrawal of a suit the orders passed during pendency of suit lapse. Therefore any act or omission of any party to the suit, either in pursuance of or in obedience to such interlocutory orders would have no legal efficacy.
Legality of amendment of earlier suit after filing of subsequent suit to enlarge its scope would have to be tested on the principles governing the law of joinder of causes of action.
Title cannot be claimed in a suit filed by somebody else.
If in suits claiming relief against three parties the plaintiff enters into a settlement with the main party not to prosecute the suits against it, the suits cannot be pursued against the rest two parties.

Headnote:(a) Administration of justice – Judicial propriety – Withdrawal of suit – Order passed during pendency of suit – Lapses – Effect – Any act or omission of any party to the suit, either in pursuance of or in obedience to such interlocutory orders – Would have no legal efficacy. (Para 31)
       (b) Code of Civil Procedure, 1908 – Section 115 – Amendment of plaint – Earlier suit amended after filing of subsequent suit to enlarge its scope – Legality of such amendment – Subject to law governing joinder of causes of action – Maintainability of both suits simultaneously doubtful. (Para 32)
       (c) Property law – Movable property – 75001 shares of BOCL obtained by MGG – Transfer to RUIAS through settlement dated 5.12.2002 – Normally RUIAS entitled to get their names entered in registers of BOCL – GGL and MHL drawing title through MGG cannot claim better title than MGG. (Para 35)
       (d) Property law – Movable property – Title – Cannot be claimed in a suit filed by somebody else. (Para 35)
       (e) Code of Civil Procedure, 1908 – Order VI Rule 16 – RUIAS filing suits II and III for recovery of 75001 shares of BOCL from MGG, GGL and MHL – Entering into settlement with MGG not to prosecute the suits against MGG – Cannot continue the suits against GGL and MHL whose title to the shares rest on right and title of MGG. (Para 37)
       (1998) 3 SCC 573 – Relied upon
       (f) Constitution of India – Article 136 – Parties filing SLPs against each and every interlocutory order in suits wherein even issues have not been framed, in name of a ‘fight for justice’ – Wasting judicial time of two High Courts and the Supreme Court for last 18 years resorting to half-truths, misleading representations and suppression of facts – Wasting in the Supreme Court a period of about 18 working days as if the Supreme Court were a Court of Original Jurisdiction trying the suits – Abuse of discretionary jurisdiction under Article 136 – Exemplary cost of Rs.25,00,000.00 imposed on each of the three parties. (Para 43, 44, 45)
       (2011) 8 SCC 249 – Relied upon
       Facts of the case:
       Messer Griesham GmbH, a German Company entered into a Share Purchase and Cooperation Agreement (AGREEMENT-1) with the shareholders of an Indian company called Goyal Gases Ltd. (“GGL”) on 12.5.1995. By virtue of the said agreement, MGG purchased 30% of equity shares of GGL. Subsequently, MGG increased its shareholding in GGL to 49%.
       On 23.6.1997, MGG entered into another Share Purchase Agreement (AGREEMENT -II) with RUIAS. By 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.
       Pursuant to the AGREEMENT-II, MGG made a public announcement on 27.6.1997 disclosing its intention to acquire 30000 shares of BOCL from public as required under Chapter-III of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
       GGL protested (in writing) against the attempt of MGG to independently acquire shares of BOCL saying that it would amount to breach of Clause 9 of the AGREEMENT-I. Eventually, both the Companies entered into AGREEMENT-III on 8.11.1997 whereunder it was agreed that out of 75001 shares of BOCL to be acquired by MGG under AGREEMENT-II, 50000 shares will be acquired in the name of GGL and only 25001 will be acquired in the name of MGG.
       On coming to know of the AGREEMENT-III, RUIAS informed MGG that they were not agreeable for the proposal of MGG and GGL jointly purchasing the shares of the BOCL. In view of the said development, MGG informed GGL on 7.5.1998 that MGG was terminating AGREEMENT-III. Thereafter, MGG proceeded to acquire 75001 shares of the BOCL on its own and paid an amount of Rs.13.5 crores to the RUIAS towards the value of 45001 shares.
       On 26.8.1998, GGL filed a Civil Suit No.1810/98 ( “SUIT-I”) in the High Court of Delhi against MGG for the enforcement of Clause 9.1 of AGREEMENT-I and for other reliefs.
       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 and OMP No. 205 of 1998 invoking Section 9 of the Arbitration & Conciliation Act, 1996. 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.
       Division Bench of the High Court restrained MGG from acquiring the shares of the BOCL.
       On 28.4.1999, RUIAS filed a Suit No.2499/1999 before Bombay High Court (SUIT-II) in substance seeking enforcement of clause 6.1 of the AGREEMENT-II.
       In the said Suit, RUIAS filed an application praying that MGG and GGL be restrained from committing breach of Clause 6.1 of AGREEMENT-II.
       By an interim order dated 6.5.1999, MGG and GGL were injuncted from committing breach of Clause 6.1 of AGREEMENT-II. MGG filed an affidavit in the said application undertaking that it would not breach Clause 6.1 of AGREEMENT-II. By an order dated 29.2.2000, Bombay High Court disposed of the said application recording the undertaking filed by MGG with a further direction that MGG and GGL “not to implement or enforce any award made by the arbitrators without obtaining the leave of” Bombay High Court:-
       By a letter dated 31st May 2000, RUIAS intimated MGG and reiterated on 1st June 2000, that AGREEMENT-II was terminated. Because according to RUIAS establishment of MHL and the transfer of 75001 shares of BOCL to MHL tantamounted to breach of clause 6.1 of AGREEMENT-II.
       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.
       On 5.2.2001, RUIAS filed second Suit bearing No.509 of 2001 (“SUIT-III”) before the Bombay High Court.
       RUIAS filed an application (Notice of Motion No. 392 of 2001) in substance seeking an injunction against MGG and GGL along with MHL either from transferring the 75001 shares of BOCL in favour of MHL or from exercising rights as beneficial owners of the said shares. In the said suit, MHL filed an application (Notice of Motion No.534 of 2002) on 21.2.2002 seeking appointment of an administrator and receiver for the administration of the assets of BOCL on the ground that RUIAS are causing substantial damage to the assets of BOCL.
       On 5.12.2002, RUIAS and MGG entered into a settlement of the disputes between them by allegedly rescinding the AGREEMENT-II. According to MHL, the terms of settlement were not made known to either MHL or GGL for a long time. The information regarding the agreement dated 5.12.2002 initially came to the knowledge of MHL (allegedly) from the website of Security Exchange Commission of United States.
       In spite of the said agreement, RUIAS not only continued with SUITS II and III, but also amended the Suit-II on 08.06.2011.
       On 4.2.2008, BOCL executed a Development Agreement in favour of another company known as HDIL granting development rights in respect of three pieces of immovable properties admeasuring 15317.77 sq. mtrs., 3513.70 sq. mtrs. and 47762.20 sq. mtrs. of land situated at Kurla Taluk of Maharashtra allegedly owned by BOCL.
       The next day BOCL informed the Bombay Stock Exchange about the above-mentioned development agreement. On 26.3.2008, HDIL mortgaged the above-mentioned property in favour of the Union Bank of India for securing a term loan of 230 crores.
       On 8.4.2008 MHL filed a Notice of Motion No. 1418 of 2008 in Appeal No. 855 of 2003 seeking an injunction against the parties to the above-mentioned Development Agreement along with various other reliefs.
       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.
       On 23.4.2008, MHL filed Suit No.2410 of 2008 (hereinafter SUIT IV) against BOCL, RUIAS, HDIL etc. seeking various reliefs including a declaration of ownership of 75001 shares of BOCL etc.
       None of the defendants have filed their written statements and no issues are framed so far.
       Finding of the Court:
       Whatever legal rights acquired by MGG in 45001 shares of BOCL purchased from RUIAS pursuant to AGREEMENT-II should revert back to RUIAS unless it created any right or interest in favour of MHL.
       Any claim by GGL and MHL on 30000 shares acquired by MGG from the public and transferred to RUIAS pursuant to AGREEMENT-II MGG must be made and established by them in accordance with law, but not in the suits filed by RUIAS.
       This case 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 half-truths, misleading representations and suppression of facts.
       Result: SLPs dismissed with cost.

JUDGMENT :

Chelameswar, J.

1. Messer Griesham GmbH, a German Company (hereinafter referred to as “MGG”) entered into a Share Purchase and Cooperation Agreement (hereinafter referred to as AGREEMENT-1) with the shareholders of an Indian company called Goyal Gases Ltd. (hereinafter referred to as “GGL”) on 12.5.1995. By virtue of the said agreement, MGG purchased 30% of equity shares of GGL. Subsequently, MGG increased its shareholding in GGL to 49%. Clause 9 of the AGREEMENT-1 reads:

“9. NON-COMPETITION CLAUSE

GGL and all Goyal Group companies will cooperate in the Indian market with right to first refusal basis/with MGG and will not for the duration of this cooperation support in any way directly or indirectly -the activities of MGG’s competitors with regard to gas business. MGG will give written information to GGL about every business opportunity it plans to take in the Indian market in regard to industrial gases and related business and GGL may decide if it wants to participate in it (right of first refusal). In case GGL does not within a period of two months after receiving MGG’s notice declare in writing that it is willing and able to participate in the planned business, MGG is free to proceed with this business on its own. However, MGG will give due consideration to the interest of GGL being its group company. Such new business which MGG undertakes should be business of gas supply of few major dedicated customers only and not to general market supply.”

2. In a company known as BOMBAY OXYGEN CORPORATION LIMITED (hereinafter referred to as the ‘BOCL’) majority shares were collectively held by a group of persons known as RUIAS (we understand that they belong to one family). On 23.6.1997, MGG entered into another Share Purchase Agreement (hereinafter referred to as AGREEMENT -II) with RUIAS. By 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 outstanding voting stock or ownership interest of the Company.”

3. Pursuant to the AGREEMENT-II, MGG made a public announcement on 27.6.1997 disclosing its intention to acquire 30000 shares of BOCL from public as required under Chapter-III of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as the ‘REGULATIONS 1997) framed in exercise of the powers conferred by Section 30 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the “SEBI Act”)

4. GGL protested (in writing) against the attempt of MGG to independently acquire shares of BOCL saying that it would amount to breach of Clause 9 of the AGREEMENT-I. Some correspondence took place between both the Companies in this regard. Eventually, both the Companies entered into AGREEMENT-III on 8.11.1997 whereunder it was agreed that out of 75001 shares of BOCL to be acquired by MGG under AGREEMENT-II, 50000 shares will be a

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2016 Supreme(SC) 298

SUPREME COURT OF INDIAJ. Chelameswar, Abhay Manohar Sapre, JJ.Messer Holdings Ltd. – PetitionerVersusShyam Madanmohan Ruia & Others – RespondentsSpecial Leave Petition (Civil) Nos. 33429-33434 of 2010 & 23088-23090 of 2012Decided On : 19-04-2016

Cases Referred (2)

SUPREME COURT OF INDIA
J. Chelameswar, Abhay Manohar Sapre, JJ.
Messer Holdings Ltd. – Petitioner
Versus
Shyam Madanmohan Ruia & Others – Respondents
Special Leave Petition (Civil) Nos. 33429-33434 of 2010 & 23088-23090 of 2012
Decided On : 19-04-2016