1. The six plaintiffs viz. (i) Tendril Financial Services Pvt. Ltd., (ii) Niketan Traders Pvt. Ltd., (iii) Ebony Traders Pvt. Ltd., (iv) Becker Traders Pvt. Ltd., (v) Cross Trading Pvt. Ltd., and, (vi) Petunia Financial Services Pvt. Ltd., instituted this suit against the nine defendants viz. (a) Namedi Leasing & Finance Ltd., (b) Northern Projects Ltd., (c) Praveen Electricals Pvt. Ltd., (d) Morgan Venture Ltd., (e) Indo Rama Synthetics (India) Ltd., (f) RNM Finstocks Pvt. Ltd., (g) Morgan Securities and Credits Pvt. Ltd., (h) Blue Coast Hotels & Resorts Ltd., and, (i) Morepen Laboratories Ltd., for the reliefs of declaration, permanent and mandatory injunction.

2. It is the case of the plaintiffs in the plaint:

(a) that on the request of the defendant no.9 Morepen Laboratories Ltd. (Morepen), the plaintiffs, who are investment companies, vide letter dated 7th February, 2003, pledged 15,00,000 equity shares of defendant no.8 Blue Coast Hotels & Resorts Ltd. (Blue Coast) owned by them in favour of defendant no.7 Morgan Securities and Credits Pvt. Ltd. (Morgan) as security for the financial facility availed of by the defendant no.9 Morepen from the defendant no.7 Morgan;

(b) that the defendants no.1 to 4 companies, though distinct legal entities, have a discernible inter-relationship with each other, with the pivotal control in the hands of the Directors of defendant no.7 Morgan;

(c) that the defendant no.8 Blue Coast is the owner of a prestigious five star hotel in the name and style of ‘Park Hyatt Goa Resort & Spa‘ at Goa;

(d) that defendant no.9 Morepen is the holding company of Dr. Morepen Ltd. which is the owner of popular medicinal brands ‘Burnol‘ and ‘Lemolate’;

(e) that disputes arose between the parties as to the amount remaining unpaid under the aforesaid financial facility and which disputes were referred for adjudication to the Sole Arbitrator; during the course of arbitration, the parties settled their inter se disputes and entered into a Settlement Agreement dated 27th May, 2003 which set out the agreed amount due towards principal and interest and mode and manner of its repayment; under the Settlement Agreement, the plaintiffs reiterated the pledge of all their right, title and interest in 15,00,000 equity shares in defendant no.8 Blue Coast, in favour of defendant no.7 Morgan; the Arbitrator published the Award dated 28th June, 2003 in terms of the said Settlement Agreement;

(f) that the defendant no.9 Morepen could not discharge its repayment liability within the time stipulated in the Award;

(g) that the defendant no.7 Morgan, on 4th January, 2004 and 9th January, 2004 filed Execution Petitions No.6/2004 and 13/2004, for execution of the arbitral Award and which along with EFA No.19-21/2006, arising from Execution Petition No.13/2004, were also pending consideration; thus from the date of pendency of Execution Petition No.13/2004, the repayment of liability of defendant no.9 Morepen as principal borrower was in dispute and subject matter of adjudication and securities in the form of pledged shares could not have been invoked by defendant no.7 Morgan pending such adjudication; the plaintiffs are however not parties to the said Execution Petition;

(h) that the defendant no.9 Morepen has during the pendency of the Execution Petition aforesaid been intermittently discharging its liability to the defendant no.7 Morgan;

(i) that the parties, in Clause 5 of the Letters of Pledge, agreed and understood that simple invocation of pledge by defendant no.7 Morgan would not amount to sale of shares to defendant no.7 Morgan; thus invocation could not extinguish the property rights of the plaintiffs in those shares which, if necessary, had to be sold in open market, after giving notice of such sale, for realization of dues if any of defendant no.7 Morgan from defendant no.9 Morepen; Clause 8(iii) of the Pledge Agreement