Messer Holdings Limited vs Shyam Madanmohan Ruia

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2010 Supreme(Bom) 1233

High Court of Judicature at Bombay
THE HONOURABLE MR. JUSTICE A.M. KHANWILKAR & THE HONOURABLE MR. JUSTICE A.A. SAYED
Messer Holdings Limited & Another
Versus
Shyam Madanmohan Ruia & Others
Case No : APPEAL NO. 855 of 2003 IN NOTICE OF MOTION NO. 534 OF 2002 IN SUIT NO. 509 of 2001 WITH NOTICE OF MOTION NO. 1308 of 2005 NOTICE OF MOTION NO. 3956 of 2005 NOTICE OF MOTION NO.4118 OF 2007 NOTICE OF MOTION NO. 1973 of 2008 NOTICE OF MOTION NO.1418 of 2008 ALONGWITH APPEAL NO. 840 of 2003 IN NOTICE OF MOTION NO. 3230 of 2000 IN SUIT NO. 2499 OF 1999 WITH NOTICE OF MOTION NO. 29 of 2006 NOTICE OF MOTION NO. 3112 of 2003 ALONGWITH APPEAL NO. 841 of 2003 IN NOTICE OF MOTION NO. 392 of 2001
Decided on : 01-09-2010

Advocates appeared:
For the Appearing Parties:-

Headnote:Companies Act, 1956 - Section 111-A - Dispute of shares respondents 1-8 having major share in Bombay Oxygen Ltd. - Dispute regarding control of some shares - By share purchase agreement plaintiff agreed to divest major control in favor of defendant 2 and defendant 1 already entered in share purchase and co-operation agreement with defendant 3 - At direction of court high court restrained shares in breach of agreement - Injuries challenged - Parties agreed to refer matter to arbitrator - Plaintiff seeking remedy in petition ad interim relief granted - Defendant invited co consent award before arbitrator - Plaintiff prayed for rescinding SPA with other reliefs - Single judge found agreement executed by defendant 1 favoring defendant 3 and transfer of shares was void as was founded on fraud - Right of plaintiff breached by directly transferring shares - All documents properly analyzed - No interference warranted - Defendants 3 and 4 also not entitled to any relief - All appeals are dismissed with costs. -Whethe r it be on account of violation of Clause 6.1 of the SPA Agreement dated 23rd June, 1997 or for violation of the Court’s order dated 6th May, 1999, 8th June, 1999 and 29th February, 2000, the second transfer of shares in favour of defendant No. 4 on 17th February, 2000 is void. Therefore, the plaintiffs are entitled for interim relief as prayed and on the other hand, the relief claimed by defendant Nos. 3 and 4 will have to be negated.
The second transfer in favour of defendant No. 4 will have to be treated as non est in law, as the same is in violation of order of injunction of the Court which include 30,000 shares purchased by the defendant No. 1 from the public. Those shares will have to be treated as, in law, having always remained with the defendant No. 1. Thus, the defendant No. 1 could always enter into agreement such as agreement dated 5th December, 2002 with the plaintiffs, whereunder those shares stood t ransferred to the plaintiffs. Hence, all the 75001 shares will have to be returned to the plaintiffs. Moreover, in view of our finding that the public announcement issued by the defendant No. 1 in furtherance of the SPA dated 23rd June, 1997 was invalid, the 30,000 shares so purchased will have to be restored to the seller thereof. However, that exercise may be impractical as the individual shareholders who have sold those 30,000 shares to defendant No. 1 may not be contactable and even if contacted may not be interested in taking back the shares in view of the changed market conditions. The shares purchased by the defendant No. 1 was at the rate of Rs. 3000/- per share. However, at the same time, neither the defendant No. 1 nor any person claiming through the said person can be allowed to take advantage of his own wrong. That may be necessary in public interest and to preserve, public policy.
We have proceeded to answer the controversy with reference to the core issues dealt with by us in this judgment. We do not think it necessary to elaborate on factual matters in detail as on analysis of the material on record we are in agreement with the prima facie findings recorded by the single Judge at this stage. Taking any view of the matter, the conclusion would remain unchanged that the defendants 3 and 4 are not entitled for any relief, whereas the plaintiffs are entitled for the interim relief as is granted to them by the Learned Single Judge.

Judgment

A.M. KHANWILKAR, J.:

Considering the multiple proceedings resorted to by the parties to the two suits, for the sake of convenience, we would refer to them as per the description of the parties given in the suits.

2. This common Judgment will dispose off all the above proceedings between the parties, before us, except Notice of Motion Nos. 2511/2008 and 2512/2008. The above four Appeals have been filed against the common Judgment and order passed by the Learned Single Judge of this Court dated 26th March, 2003 and clarified on 2nd May, 2003 while disposing of all the Notice of Motions in the two suits. The Appeals, however, take exception to the order passed in Notice of Motion Nos. 3230/2000, 392/2001, 534/2002 and 1231 of 2002.

3. Appeal No. 840/2003 is filed by the defendant no.3 against the order in Notice of Motion No. 3230/2000 in Suit no. 2499/99. The Appeal No. 841/2003 is also filed by the defendant no. 3, but against the order in Notice of Motion No. 392/2001 in Suit No. 509/2001. Appeal No. 855/2003 is filed by defendant no.4 against the decision in Notice of Motion No. 534/2002 in Suit No. 509/2001. Appeal No. 857/2003 is filed by defendant no.3 against the decision in Notice of Motion No. 1231/2002 in Suit No. 2499/99. We would for the sake of convenience reproduce the reliefs claimed in the said four Notice of Motions, which is the subject matter of controversy before us in the four appeals. The same reads thus:

N/M NO.3230/2000 in Suit No. 2499/1999 (filed on 15/11/2000) “(a) that this Hon’ble Court may be pleased to grant leave to Defendant No.3 to act pursuant to implement and enforce the consent Arbitral Award dated 21.9.2000.

(b) ad-interim relief in terms of prayer (a) above;

(d) For such other and further relies as the nature and circumstances of the case may require.”

N/M NO.392/2001 in Suit No. 509/2001 (filed on 15/02/2001)

“(a) that pending the hearing and final disposal of the suit, the Defendants be restrained from transferring and/or registering and/or taking any steps to transfer and/or register the said 75,001 shares in the name of any person or persons, firm or body corporate including the 1st and/or 3rd and/or 4th defendants without the consent of the plaintiffs;

b) that pending the hearing and final disposal of this suit defendant No.1, 3 and 4 be restrained by

an interim order and injunction of this Hon’ble Court from:

i) exercising any rights, including as beneficial owner, in, to, upon, or in respect of the said 75,001

shares;

ii) acting pursuant to, and or taking any steps in furtherance of the said Agreement dated 17th

February 2000 and the said Consent Award dated 21st September 2000;

c) for ad-interim reliefs in terms of prayers (a) and (b) above;

d) for costs;

e) for such further and other reliefs as the nature and circumstances of the case may require.”

N/M NO.534 OF 2002 in Suit No. 509/2001 (filed on 21/02/2002) “(a) That pending the hearing and final disposal of the above suit, this Hon’ble Court may be pleased to appoint Administrator and/or a Board of Directors of Defendant No.2 having representation from the Plaintiffs and Defendant No.4 with an independent Chairman.

(b) That pending the hearing and final disposal of the above Suit, Court Receiver, High Court, Bombay or some other fit and proper person be appointed as Receiver of Air Separation Plant belonging to the 2nd Defendant company installed at Mukund Ltd. at Kalwa, Thane Dist. with all powers under Order 40 Rule 1 of CPC 1908.

(c) That pending the hearing and final disposal of the Suit, the 2nd Defendant be restrained by an order and injunction of this Hon’ble Court from selling, disposing of, encumbering or creating third party interest in its assets and properties including the Air Separation Plant installed at the factory of Mukund Ltd. at Kalwa.

(d) That pending the hearing and final disposal of the suit this Hon’ble Court may be pleased to appoint independent Auditor from the panel of this Hon’

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2010 Supreme(Bom) 1233

Cases Referred (13)