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2012 Supreme(Del) 867
High Court of Delhi
S. MURALIDHAR, J.
Ruchi Agarwal & Others
Versus
Nicolian India & Others
O.M.P. Nos. 444 OF 2006, 445 OF 2006, 446 OF 2006, 447 OF 2006.
Decided On : 26-03-2012
For the Petitioners:Rohit Choudhry with Ms. Preeti Khiwani, Advocates.
For the Respondents:R1, Rajiv Nayar, Senior Advocate and Jayant Nath, Senior Advocate, Sanjay Kumar and Radhika, Advocates.
The main legal point established in the judgment is the validity of the arbitration agreement and the control of shareholding by the parties.
Headnote:
Forgery - Arbitration Agreement - Companies Act - [Section 372A of the Companies Act, 1956, Section 34 of the Arbitration and Conciliation Act, 1996] - The court analyzed the evidence and concluded that the documents were not forged. The arbitration agreement was held to be valid and executed by the authorized person. The court also found that the entire shareholding was controlled by the parties and that they took no steps to transfer their shareholdings despite the agreement.
Fact of the Case:
The case involved disputes between the predecessor in interest of the Petitioners and Respondent No.1 regarding the booking of properties in Garden Estates, Gurgaon. The Respondent deposited a sum with GEL for the purpose of booking properties, and late Mr. Rakesh Agarwal and others stood guarantee for the payments. GEL failed to deliver possession of the properties and the guarantors expressed inability to refund the amount. An agreement was entered into for the transfer of shareholding in HBL to the Respondent, but the transfer was not effected.
Finding of the Court:
The court found that the documents were not forged, the arbitration agreement was valid, and the shareholding was controlled by the parties. The court dismissed the petitions with costs to be paid by the Petitioners to Respondent No.1.
Issues: The issues included the validity of the arbitration agreement, the transfer of shareholding, and the liability to repay the amount given to GEL.
Ratio Decidendi: The court held that the documents were not forged, the arbitration agreement was valid, and the shareholding was controlled by the parties. The court also found that the guarantors took no steps to transfer their shareholdings despite the agreement.
Final Decision: The court dismissed the petitions with costs to be paid by the Petitioners to Respondent No.1.
1. These four petitions challenge Award dated 10th June 2006 passed by the sole Arbitrator in the disputes between the predecessor in interest of the Petitioners late Mr. Rakesh Agarwal and Respondent No.1 in each petition.
2. The facts in OMP No.446 of 2006 are that Respondent No.1, Nicolian (India) Private Limited (subsequently renamed as Nicolian Securities and Finance Pvt. Limited) deposited a sum of Rs.50,08,500 with Respondent No.3, Gulmohar Estates Limited (‘GEL’) for the purpose of booking of properties in Garden Estates, Gurgaon, a project being executed by GEL. It is stated that the amount was advanced by two cheques dated 31st July 1991 for the sums of Rs.24,84,000 and Rs.25,24,500 respectively. Late Mr. Rakesh Agarwal, the predecessor in interest of the Petitioners and Mr. Rakesh Agarwal (HUF) executed a deed of personal guarantee on 31st July 1991 whereby both Mr. Rakesh Agarwal, as well as Rakesh Agarwal (HUF) stood guarantee for the payments of the advance made by Respondent No.1 to GEL. It was assured that in the event GEL failed to allot the property by 31st March 1996 or such other extended time as may be agreed in writing by Respondent No.1, the amount paid towards the booking of the property would be refunded with interest at 24% per annum. It is stated that in order to secure the advance of Rs.50,08,500 made by the Respondent to GEL, another company named Apogee International Ltd. (‘AIL’) executed a corporate guarantee dated 31st July 1991 in favour of Respondent No.1. AIL was holding more than 75% shareholding in GEL. AIL authorized late Mr. Rakesh Agarwal as its Attorney to enable him to execute the deed of corporate guarantee dated 31st July 1991 on behalf of AIL. It is the case of the Respondent No.1 that both GEL and AIL were under the effective control of late Mr. Rakesh Agarwal inasmuch as he was holding 7.07% shareholding in GEL and 46.4% in AIL. According to Respondent No.1, late Mr. Rakesh Agarwal was a promoter Director in AIL and his wife, Mrs. Ruchi Agarwal was only a dummy Director put up by Mr. Rakesh Agarwal in AIL. She did not hold any share in her own name. With late Mr. Rakesh Agarwal holding 46.4% in AIL and his father late Mr. Radhey Shyam Agarwal holding 25.81% of the shares, it was claimed that AIL was a company controlled by Mr. Rakesh Agarwal and his family. With the expiry of Mr. Radhey Shyam Agarwal, the effective shareholding of Mr.Rakesh Agarwal increased to 72.45% of the total shareholding.
3. It was stated that late Mr. Rakesh Agarwal, Rakesh Agarwal (HUF) and AIL held shares to the extent of 66.09% in Hotel Banjara Limited (‘HBL’). After the death of his father, Mr. Rakesh Agarwal along with AIL was holding shares to the extent of 95.07% in GEL. Accordingly, it was contended by Respondent No.1 before the learned Arbitrator that late Mr. Rakesh Agarwal was a moving spirit in all these companies i.e. HBL, AIL and GEL which were in fact closely held companies of late Mr. Rakesh Agarwal and his family members. In GEL late Mr. Rakesh Agarwal held 7.07% shares and together with AIL (88%) held 95.07% shares.
4. GEL failed to deliver possession of the properties by 31st March 1996 and kept asking for extension of time on the plea that certain problems relating to the litigation were encountered in the execution of the project. Late Mr. Rakesh Agarwal time and again requested that Respondent No.1 should not enforce the bank guarantee or the corporate guarantee as the property was going to be ready within a short time. Despite this assurance, GEL could not give possession of the property. Likewise, the guarantor late Mr. Rakesh Agarwal, Rakesh Agarwal (HUF) and AIL expressed inability to refund Respondent No.1 the sum of Rs.50,08,500 together with 24% interest with semi-annual rests.
5. It is stated that after negotiations between the parties, an agreement was entered into on 18th November 1999 between Respondent No.1, late Mr. Rakesh Agarwal, Rakesh Agarwal (HUF), GEL and AI
