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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO. 732 OF 2005
IN
ARBITRATION PETITION NO. 237 OF 2003
Rahul Bajaj,
of Mumbai Indian Inhabitant,
having his office at 406,
Commerce House, 140, Nagindas
Master Road, Fort, Mumbai-400 023. ....Appellant.
Vs.
1 Mangal Keshav Securities Limited,
a company incorporated under the
provisions of the Companies Act,
1956, and having its registered office
at 501, Heritage Plaza, Opp. Indian
Oil Colony, J.P. Road, Andheri,
(West), Mumbai-400 058.
2 The National Stock Exchange of
India Ltd. through its Executive
Director having its office at "Exchange
Plaza", Bandra Kurla Complex,
Bandra (East), Mumbai-400 051. ....Respondents.
WITH
NOTICE OF MOTION NO. 1028 OF 2016
IN
APPEAL NO. 732 OF 2005
IN
ARBITRATION PETITION NO. 237 OF 2003
Mangal Keshav Securities Limited ...Applicant
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IN THE MATTER BETWEEN
Rahul Bajaj ....Appellant
Vs.
Mangal Keshav Securities Limited & Anr. ....Respondents.
Ms. Sonal i/by Das Associates for the Appellant.
Mr. Janak Dwarkadas, Senior Advocate, Mr. Astad Runderia, Mr. Mihir
Nerurkar i/by Mulla & Mulla for Respondent No. 1 in Appeal and for
the Applicant in Notice of Motion.
None for Respondent No.2.
CORAM : ANOOP V. MOHTA AND
A.S. GADKARI, JJ.
PRONOUNCED ON : 15 JULY 2016.
RESERVED ON : 8 JUNE 2016.
JUDGMENT (PER-ANOOP V. MOHTA, J.):-
The present Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, "the Arbitration Act"), against impugned Judgment and order dated 2 February 2005 passed by the learned Single Judge under Section 34 of the Arbitration Act and thereby, maintained the award passed by the Arbitral Tribunal of National Stock Exchange dated 13 December 2002, arising out of Rules, Bye-laws and Regulations of the National Stock Exchange (for short, "NSC Rules").
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2 The matter was listed at the instance of Appellant for
withdrawal of the Appeal itself, on 25 February 2016. Respondent No.1, however, resisted/opposed even the withdrawal and therefore, sought time to file affidavit to show how the withdrawal would cause hardship and injustice to them. Respondent No.1 thereby, had taken out Notice of Motion No. 1028 of 2016. However, during the course of argument, on instructions, Respondent No.1 did not press the Motion, but opposed the withdrawal of Appeal on various grounds and made the submission with details, in support of the same opposition. It is stated that apart from the background of litigation, in view of fluctuations of the price of 11,000 shares of ARBL in the market, how Respondent No.1 would suffer great injustice and hardship, apart from financial losses to the tune of Rs.13.48 crores, though operative part of the award which was in favour of Respondent No.1, reflected the situation otherwise. The operative part of Award dated 13 December 2002, reads thus:-
"8. THE AWARD The Panel of Arbitrators directs (a) the Respondent Shri Rahul Bajaj to pay to the Applicant Mangal Keshav Securities Ltd., a sum of Rs. 29,21,976.85 (Rupees twenty nine lakh twenty one thousand nine hundred seventy six and paise eighty five) and (b) the Applicant to deliver to the Respondent 11000 3/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 4 app732.05.sxw shares of Amara Raja Batteries Ltd., upon receipt of the said payment.
9. Costs There is no order as to costs."
3 In view of peculiarity of the case and how the delay in Arbitration proceedings decision would cause great injustice and hardship to Respondent No.1, as the award, at the relevant time/stage could not be executed because of pendency before the Court initially of Section 34 Application and later on because of the present Appeal arising out of the same. After hearing the parties and considering the submissions so made, we are inclined to deal with the issue of withdrawal of the Appeal and so also the resistance of the same in the background of effect of fluctuations of share prices in the share market.
4 The background of the case is as under:-
In January 2001, a Member-Client Agreement was executed between the Appellant and Respondent No.1. On 2 March 2001, the Appellant deposited with Respondent No.1 a margin sum amounting to Rs.5 lacs to the credit of Respondent No.1. On 7 March 2001, the 4/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 5 app732.05.sxw subject contract note was issued by Respondent No.1 for purchase of 11,000 shares of Amara Raja Batteries Ltd. (ARBL) by Respondent No.1 on the instructions of and on behalf of the Appellant @ Rs.315.71 per share, amounting to purchase price of Rs.34,91,465/-.
The contract note is not acknowledged by the Appellant, but he did not deny that he had placed the order for purchase of 11,000 shares of ARBL in settlement No.10.
5On 12 March 2001, a sum of Rs.69,406.80/- being the credit towards settlement No.9 was credited to the Appellant. The Appellant had a credit balance of Rs.5,69,489.80 with Respondent No.1 as on 12 March 2001, being the date on which the previous settlement, i.e. Settlement No.9, had ended. On 19 March 2001, the billed amount, after deducting Rs.5 lacs margin paid by the Appellant and credit amount of Rs.69,506.80/- made in Settlement No. 9, was debited to the running account of the Appellant, being the pay-in date for Settlement No.10. This gave rise to a debit balance of Rs.29,21,976.85/-. In the month of September 2001, the Appellant had not cleared the outstanding amount of Rs.29,21,976.85/-, in spite of various demands by Respondent No.1. Respondent No.1 made an 5/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 6 app732.05.sxw application for arbitration of its claim of Rs.29,21,976.85/-. During the period from 4 and 8 February 2002, the Appellant filed his statement of defence to the said claim made by Respondent No.1, and also filed a counter claim, claiming payment from Respondent No.1 of a sum of Rs.5,69,506.80/- and interest thereon at the rate of 18% per annum from 12 March 2001. The amount was claimed by the Appellant, being the margin money plus Rs.69,506.80/-, lying to his credit.
6 On 13 December 2002, the Arbitral Tribunal adjudicating upon the said claim and counter-claim, passed an award. The Arbitral Tribunal, in paragraph No.6 of the Award, comes to the finding that the amount claimed by the Appellant in its Counter claim had been accounted for and set off by the Respondent in arriving at the amount claimed in its statement of claim. Accordingly, the Arbitral Tribunal held that the question of entertaining the counter-claim did not arise.
As on the date of the Award, the Market Value/Price of share of ARBL was Rs.64.30 per share. Under the Award, there would have been the position and obligations of the parties (i) Respondent No.1 was to receive a sum of Rs.29,21,976.85/- from the Appellant and (ii) after 6/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 7 app732.05.sxw the receipt of the aforesaid amount, Respondent No.1 would be required to purchase and deliver 11,000 shares of ARBL, which then had an aggregate market value of Rs.7,07,300/- Respondent No.1 would have thus been entitled to receive from the Appellant a net sum of Rs.22,14,676.85/-.
7 On 24 March 2003, the Appellant preferred an Arbitration Petition under Section 34 of the Arbitration Act and sought reliefs; (a) the Arbitral Award be set aside and, (b) to allow the Appellant's counter-claim and direct the Respondent to make payment to the Appellant of Rs.5,69,506.80/-, along with interest thereon at the rate of 18% per annum from 12 March 2001. In paragraph No.2 of the Arbitration Petition, the Appellant has categorically stated that the Appellant was seeking to have the Award set aside "both to the extent that it dismissed the Petitioner's Counter-claim as also to the extent to which 1st Respondent's claim is allowed." The same statement also from the part of ground (y) of the Petition. Further, as can be seen from ground (1) of the Petition, the Appellant was aware that for the Award to be complied with, Respondent No.1 would be required to purchase 11,000 shares of ARBL since it was an admitted position that the said 7/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 8 app732.05.sxw shares were not in possession of Respondent No.1. The learned Single Judge, by order dated 2 February 2005, dismissed the Arbitration Petition.
8 On 31 March 2005, the Appellant preferred the present Appeal under Section 37 of the Arbitration Act. The Appeal was admitted on 4 October 2005. On 25 September 2007, each share of ARBL of face Value of Rs.10 was split to a face value of Rs. 2 per share. Thus, 11,000 shares of face value of Rs.10 would have become 55,000 shares of face value of Rs. 2. On 15 October 2008, bonus of 1:2 was issued by ARBL. Thus, 11,000 shares of face value Rs.10 would have become 82,500 shares of face value of Rs. 2. On 26 September 2012, again face value of Rs. 2 was split of Rs.1 per share.
Thus, 11,000 shares of Face value of Rs.10 would have become 1,65,000 shares of face value Rs.1 per share.
9 In the year 2016, when the present Appeal came up for hearing in February 2016, the Appellant with a disingenuous intention of seeking to take advantage of the fact that by reason of the statutory stay/injunction from executing the said award as a decree since 8/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 9 app732.05.sxw December, 2002 to February, 2016 i.e. period of 14 years might result in a windfall because: (i) whereas, Respondent No. 1 was entitled to receive only a sum of Rs.29,21,976.85/- under the award.
Respondent No.1 if ordered to deliver the equivalent number of shares being equivalent to the original 11,000 shares of face value of Rs.10 per share, Respondent No.1 would have to deliver 1.65 lakh shares of face value of Rs.1 each and; (ii) the market value of these 1.65 lakhs equity shares in February 2016, would have been approximately Rs.860 per share, which would have meant that the Appellant instead of being a Judgment Debtor to the extent of Rs.22 lacs would become a judgment-creditor to the extent of Rs.14.19 crores (1,65,000 x 860).
As on 7 June 2016, the market value/price of shares of ARBL is Rs.
835/- per share, resulting in an aggregate market value/price of Rs.91,85,000/- for 11,000 shares of ARBL of face value Rs. 1 each.
10 The submission of the learned counsel appearing for Respondent No.1 is that:-
On 7 March 2001, on instructions of Appellant, Respondent No.1 purchased 11,000 shares of ARBL at Rs. 315.71 per share and the price of the said shares is Rs.34,91,466.65. On 13 December 9/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 10 app732.05.sxw 2002, Arbitral Award directed that 11,000 shares had to be delivered by Respondent No.1 against receipt of Rs.29,21,976.85/-. Market value/price of Shares of ARBL was Rs.64.30 per share. Price of 11,000 shares was Rs.7,07,300/- and the gain is of Rs.22 lacs. On 2 February 2005, market value/price of shares of ARBL was Rs. 102.55 per share. Price of 11,000 shares was Rs.11 lacs and the gain is of Rs.17 lacs. On 7 June 2016, if the award was to be executed as on date and if on the execution of the Award Respondent No.1 was ordered to deliver 11,000 shares of face value of Rs.1 per share, price of 11,000 shares was Rs.91 lacs and the loss is of Rs.62 lacs. If on the other hand Respondent No.1 was required to deliver equivalent number of shares, namely 1.65 lacs shares of face value Rs.1 per share at the current market value, market value of 11,000 shares of ARBL @ Rs. 835. Price of 11,000 shares was Rs.13.77 crores/- and the loss is of Rs.13.48 crores.
11 Thus, as on the date of the award, the Respondent was entitled to receive a sum of Rs. 29,21,976.85 from the Appellants, against delivery of shares worth Rs.7,07,300/- thereby, making a gain of Rs.22,14,676.85. The Respondent was prevented from doing so by 10/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 11 app732.05.sxw reason of the Appellant having filed a Petition under Section 34 of the Arbitration Act. The execution of Arbitral Award as a decree of this Court was stayed, first by reason of admission of the Petition filed by the Appellant, and later by reason of admission of the present Appeal of this Court. Both the aforesaid orders were passed at the instance of the Appellant and in the proceedings instituted by the Appellant.
These orders, and the stay that operated as a result of these orders, are now sought to be varied and set aside by way of withdrawal of the present proceedings by the Appellant. Under the Award, at the time when it would have been executable, had the Appellant not instituted the aforesaid proceedings, the following would have been the position and obligations of the parties- (i) Respondent No.1 was to receive a sum of Rs.29,21,976.85 from the Appellant; (ii) After receipt of the aforesaid amount, Respondent No.1 would be required to purchase and deliver 11,000 shares of ARBL which then had a market value of Rs.7,07,300/-.
12 The Appellant, who is now seeking to withdraw his Appeal, can, nevertheless be directed by this Court to make restitution to Respondent No.1 either in the form of costs, quantified or by 11/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 12 app732.05.sxw restoring the status quo ante and relegating the parties to their positions and obligations as stated in paragraph 4 hereinabove. This may be done by directing the Appellant to pay to the Respondent the sum of Rs.22,14,676.85/- (being the amount of gain the Respondents would have made as on the date of the award) with interest thereon, at 15% per annum from the date of the award i.e. 13 December 2002, till payment. If on the other hand Respondent No. 1 was required to deliver equivalent number of shares i.e. 1.65 lacs shares of ARBL of face value of Rs.1 each, the market value would be 13.77 crores.
13 In R. Rathinavel Chettiar & Anr. Vs. V. Sivaraman & Ors. 1 , the Supreme Court has dealt with the aspect of withdrawal of the Suit by the Plaintiff after passing a decree at appellate stage, referring to Order 23, Rule 1 and 1-A of CPC and observed as under:-
"8. The question in the present case is, however, a little different. If the suit has already been decreed or, for that matter, dismissed and a decree has been passed determining the rights of the parties to the suit, which is under challenge in an appeal, can the decree be destroyed by making an application for dismissing the suit as not pressed or unconditionally withdrawing the suit at the appellate stage? It is this question which is to be decided in this appeal."
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"12. ...........Since withdrawal of suit at the appellate stage, if allowed, would have the effect of destroying or nullifying the decree affecting thereby rights of the parties which came to be vested under the decree, it cannot be allowed as a matter of course but has to be allowed rarely only when a strong case is made out............"
"18. Both these decisions, namely, the decision of the Allahabad High Court in Kedar Nath's case [Kedar Nath V. Chandra Kiran, AIR 1962, All 263] and Kanhaiya's case [Kanhaiya V. Dhaneshwari, AIR 1973 All 212:1972 All LJ 575] were followed by the Andhra Pradesh High Court in Thakur Balaram Singh v. K. Achuta Rao (1977) 2 APLJ 111, and it was held that though the plaintiff has an absolute right to withdraw his suit before the passing of a decree under Order 23 Rule 1(1) CPC but permission to withdraw the suit at the appellate stage would be refused if it would have the effect of prejudicing or depriving any right which became vested in the respondents or had accrued to them by reason of the findings recorded by the trial court."
"22. In view of the above discussion, it comes out that where a decree passed by the trial court is challenged in appeal, it would not be open to the plaintiff, at that stage, to withdraw the suit so as to destroy that decree. The rights which have come to be vested in the parties to the suit under the decree cannot be taken away by withdrawal of the suit at that stage unless very strong reasons are shown that the withdrawal would not affect or prejudice anybody's vested rights. The impugned judgment of the High Court in which a contrary view has been expressed cannot be sustained."
14 Insofar as, the aspect of selecting the data of discharging the obligations, which ought to have been done on the date and 13/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 14 app732.05.sxw within the reasonable time and because of pendency of the matter, it is onerous for a party against whom stay was obtained to comply with the basic order. The Apex Court in Forasol Vs. Oil and Natural Gas Commission 2 , has observed in paragraph 40 as under:-
"40. ................The court must select a date which puts the plaintiff in the same position in which he would have been had the defendant discharged his obligation when he ought to have done, bearing in mind that the rate of exchange is not a constant factor but fluctuates, and very often violently fluctuates, from time to time. With these considerations in mind, we will now examine the feasibility of the several dates set out by us at the beginning of our discussion on this point".
15 From the above, it is eminent that the Suit and/or Appeal may not be allowed to be withdrawn merely for asking. The Court needs to consider the aspects of vested rights and/or crystallized rights in favour of either of the parties. The provisions of Order 23 Rule 1 of the CPC, therefore, cannot be read and interpreted to mean that the Suit and/or Appeal can be withdrawn by either of the parties at any stage, and/or the Court needs to permit the said withdrawal.
16 In the present case, we have to note that the Appellant,
2 1984 (Supp) SCC 263
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against whom the award was passed partly, has preferred the Appeal under Section 37 of the Arbitration Act, as his Application under Section 34 was rejected, that resulted into automatic stay of the award. There was no Appeal filed by the Respondent-Original Claimant, in whose favour the conditional award was passed, but for the pendency of the Appeal, Respondent No.1 could not get a sum of Rs.29,21,976.85/- from the Appellant. On the date of award and/or on the date of confirmation of Award i.e. on 13 December 2002, the Appellant has required to pay the said amount. However, he failed to make the payment. The Respondents' obligation, after the receipt of the amount, to deliver 11,000 shares of ARBL to the Appellant, on the date of award and on the date of confirmation of award. Had the Appellant complied with his obligation, the liability based upon the market value, therefore, of the said 11,000 shares of ARBL, would have been quite restricted and reasonable. Respondent No.1, had the Appellant complied with his obligation based upon the rate/market value of 11,000 shares of ARBL, as stated, would have gained only Rs.7,07,300/-. The pendency of Appeal, as filed by the Appellant, apart from non-compliance of his part of basic payment which resulted into the delay in effective and timely execution of the 15/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 16 app732.05.sxw award after confirmation by the learned Single Judge on 2 February 2005.
17 The Appeal was filed on 31 March 2005 and listed for final hearing in February 2016, that resulted into the pendency of execution of the said award for more than 14 years. Respondent No.1, who was entitled to receive only Rs.29,21,976.85/- would have purchased the shares and would have transferred 11000 shares, having valuation of above 7 lacs. Respondent No.1 would have earned or get the profit of Rs. 22 lacs and odd, without interest.
About 14 years pendency, therefore, has direct impact on the market value of the shares in question. As stated and not disputed, the market value of the said shares of ARBL, as of today is about 13.77 crores. The Appellant, who in view of the award in question, is entitled for on the date of award and/or decree and/or would have earned above Rs.22 lacs with interest thereon on the date of award and now required to pay Rs.13.77 crores valued shares. The pendency of such Arbitration proceedings, in the present peculiar facts and circumstances, in our view, has also substantially taken away the rights so created on the date of award and on the contrary cause great 16/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 17 app732.05.sxw injustice, hardship and financial losses to Respondent No.1.
Therefore, the crux is, the rights so created in the parties on the date of award, subject to confirmation of award, if any, needs to be respected as crystalized and accrued on that date of award and/or on the date of confirmation of the award. The Appellant, therefore, has sought to withdraw the Appeal, as opposed by the other side, and would be gaining about Rs.13.77 crores because of pendency of the Appeal. The other side has opposed of such withdrawal and insisted for hearing of the matter and/or even prayed for withdrawal of the Suit/Claim, so that such huge liability should not be imposed upon it for no fault of Respondent No.1.
18 Notice of Motion was taken out by Respondent No.1 for withdrawal of the claim itself, in this background, as the Appellant wants to withdraw the Appeal. However, during the course of the arguments, the same was not pressed by Respondent No.1. The Appellant, however, not willing to proceed with the final hearing of the matter and submitted to permit him to withdraw the Appeal. In the background so referred above, the Judgments so cited, makes him in advantageous position, as he is earning the amount with huge 17/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 18 app732.05.sxw gain/profit of Rs.13.77 crores and odd. On the contrary, Respondent No.1 would be in disadvantageous stage/position, as he would require to hand over 11,000 shares having the valuation of Rs.13.77 crores.
In our view, therefore, there is a substance in the submission so made by the learned Senior Counsel appearing for Respondent No.1, that such withdrawal of Appeal, because of peculiarity of the share market business, should not be permitted and even if permitted, as law permitted them to withdraw the Appeal, but the Court needs to consider the rights of the parties as crystallized on the date of award and/or at the most, the date of confirmation of award, when the learned Single Judge rejected the Application by confirming award dated 2 February 2005. The counter obligations of the Appellant to make the payment as per the award, itself was not complied with by the Appellant. Therefore also insistence of payment in lieu of shares as of date of withdrawal of Appeal is unjust, unfair and impermissible to frustrate the arbitration provisions.
19 Normally, in view of the provisions and even otherwise, the Court would have permitted to withdraw the Suit and/or Appeal at the instance of the Plaintiff and/or the Appellant. We are not 18/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 19 app732.05.sxw concerned with the other situations. The Judgments so read and referred by the parties and the relevant extracts, so recorded above, are required to take into consideration. Therefore, in view of above position on record, we have considered the rights so created and crystallized for and against both the parties. The Appellant cannot be permitted to take advantage of his own wrong and/or own action, and for the pendency of Section 34 Application and thereafter the Appeal in question, resulted into the delay of execution of award. The reciprocal obligation, therefore, got stayed automatically.
20 The fulfillment of obligation of making payment by the Appellant even taken note of, even if with interest, still the liability and/or reciprocal obligation of Respondent No.1 is quite harsh and unjustifiable. The Appellant, therefore, cannot be permitted to take advantage of his own action by putting Respondent No.1 firstly, on disadvantageous stage for keeping the Appeal pending for 14 years and/or not complying his obligation within time, as per the award and now by withdrawing the Appeal insisting Respondent No.1 to hand over 11,000 shares of ARBL having valuation of Rs.13.77 crores. The litigation and/or arbitration proceedings, therefore, cannot be used 19/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 20 app732.05.sxw and utilized for such purposes.
21 The business of share marketing and its fluctuations and/or in a given case, uncertainty though part of the commercial transactions between the parties, yet because of pendency of such Arbitration Petition and the strategical move of Appeal after 14 years in peculiarity of the case so referred above, we are not inclined to accept that there cannot be an issue with the commercial mean, the effects and its side effects, the share market and odd make the person to involve in it. The timely action, even in such commercial transactions by both the parties, is always the requirement. Having once obtained the award through the agreed arbitral tribunal, its execution needs to be followed immediately. The confirmation of the award and/or its execution, however, required to be done through the Court under the Arbitration Act. The pendency of Arbitration proceedings and/or the Court proceedings in question, therefore, would be read and referred to mean and/or permit to use and utilize in favor of the Appellant by putting him in advantageous position and making the Respondents disadvantageous position.
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22 The law permits the parties to withdraw the Suit and/or
Appeal. The Appellant, therefore, insisted for withdrawal. The Court cannot compel the party to proceed with the matter. The Court at the most, dismiss the matter if the Appellant does not want to prosecute his Appeal. In the present case, the Appellant wants to withdraw the Appeal knowing fully its benefits. The Respondents' rights so crystallized on the date of award, required to be protected. We cannot permit the Appellant to use and utilize the benefits of pendency of such litigation and insisting the Respondents to suffer loss of Rs.13.77 crores. Though the award was passed on facts, it would have entitled the Appellant in the year of the award of 2002, a gain of Rs.22 lacs.
In this situation, we are inclined to take note of restitution provisions as contemplated under Section 144 read with Section 151 of the CPC to do complete justice between the parties. We also see that it is necessary to bring the position of the parties, in which they would have been, had the Court not intervened by not permitting the parties to execute the award immediately after the date. The Appellant taking note of the position of law, preferred the Appeal and halted the execution of the award. The withdrawal after 14 years, itself means the change in price and the resulted difference/losses to Respondent 21/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 22 app732.05.sxw No.1. The request of withdrawal, therefore, we have to permit, but we are not inclined to go to the position back on the date of the confirmation of the award of the year 2005, as the award, even otherwise, could not have been executed/enforced unless confirmed under Section 34 of the Arbitration Act and/or settled by the parties.
The Appellant, if had not filed the Appeal, Respondent No. 1 would have in a position to enforce award dated 13 December 2002 from the confirmation of award i.e. 2 February 2005.
23 The Apex Court in South Eastern Coalfields Ltd. Vs. State of M.P. & Ors. 3 while dealing with the aspect of restitution under Section 144 of the Code of Civil Procedure, 1908 (CPC), reiterated as under:-
"27. Section 144 CPC is not the fountain source of restitution, it is rather a statutory recognition of a pre-existing rule of justice, equity and fair play. That is why it is often held that even away from Section 144 the Court has inherent jurisdiction to order restitution so as to do complete justice between the parties. In Jai Berham v. Kedar Nath Marwari (1922) 49 IA 351= AIR 1922 PC 269, Their Lordships of the Privy council said:
"It is the duty of the Court under Section 144 of the Civil Procedure Code to 'place the 3 (2003) 8 SCC 648 22/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 23 app732.05.sxw parties in the position which they would have occupied, but for such decree or such part thereof as has been varied or reversed'. Nor indeed does this duty or jurisdiction arise merely under the said section. It is inherent in the general jurisdiction of the Court to act rightly and fairly according to the circumstances towards all parties involved.
Cairns, L.C., said in Rodger v. Comptoir D'Escompte de Paris (1871) 3 PC 465= 7 Moo PCC NS 314= 17 ER 120):-
"[O]ne of the first and highest duties of all courts is to take care that the act of the court does no injury to any of the suitors and when the expression, 'the act of the court' is used, it does not mean merely the act of the primary court, or of any intermediate court of appeal, but the act of the court as a whole, from the lowest court which entertains jurisdiction over the matter up to the highest Court which finally disposes of the case".
This is also on the principle that a wrong order should not be perpetuated by keeping it alive and respecting it, (A. Arunagiri Nada r v. S.P .
Rathinasami) [(1971) 1 MLJ 220]. In the exercise of such inherent power the courts have applied the principles of restitution to myriad situations not strictly falling within the terms of Section 144.
28. That no one shall suffer by an act of the court is not a rule confined to an erroneous act of the court; the "act of the court" embraces within its sweep all such acts as to which the court may form an opinion in any legal proceedings that the court would not have so acted had it been correctly apprised of the facts 23/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 24 app732.05.sxw and the law. The factor attracting applicability of restitution is not the act of the court being wrongful or a mistake or error committed by the court; the test is whether on account of an act of the party persuading the court to pass an order held at the end as not sustainable, has resulted in one party gaining an advantage which it would not have otherwise earned, or the other party has suffered an impoverishment which it would not have suffered but for the order of the court and the act of such party. The quantum of restitution, depending on the facts and circumstances of a given case, may take into consideration not only what the party excluded would have made but also what the party under obligation has or might reasonably have made.
There is nothing wrong in the parties demanding being placed in the same position in which they would have been had the court not intervened by its interim order when at the end of the proceedings the court pronounces its judicial verdict which does not match with and countenance its own interim verdict. Whenever called upon to adjudicate, the court would act in conjunction with what is real and substantial justice. The injury, if any, caused by the act of the court shall be undone and the gain which the party would have earned unless it was interdicted by the order of the court would be restored to or conferred on the party by suitably commanding the party liable to do so. Any opinion to the contrary would lead to unjust if not disastrous consequences. Litigation may turn into a fruitful industry. Though litigation is not gambling yet there is an element of chance in every litigation. Unscrupulous litigants may feel encouraged to approach the courts, persuading the court to pass interlocutory orders favourable to them by making out a prima facie case when the issues are yet to be heard and determined on merits and if the concept of restitution is excluded from application to interim orders, then the litigant 24/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 25 app732.05.sxw would stand to gain by swallowing the benefits yielding out of the interim order even though the battle has been lost at the end. This cannot be countenanced. We are, therefore, of the opinion that the successful party finally held entitled to a relief assessable in terms of money at the end of the litigation, is entitled to be compensated by award of interest at a suitable reasonable rate for the period for which the interim order of the court withholding the release of money had remained in operation."
24 The rights of parties are crystalized on 13 December 2002 i.e. the date of passing of Arbitration award and are further confirmed on 2 February 2005, under Section 34 by the learned Single Judge in the aforesaid Petition. Therefore, taking overall view of the matter, we are inclined to maintain the date for restitution and/or implementation of the award so passed, for all the future transactions and/or respective payments with interest from the date of confirmation of award. We are not inclined to permit to get the benefits of pendency of this litigation, on the date of request of the withdrawal of the Appeal after 14 years. Both the parties to comply with their obligations. The shares, if not possible to deliver, the actual costs amount of the shares on the date of confirmation of award should be the date for the respective liabilities/payment with interest, as awarded.
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25 The present situation is rather a peculiar one. The
Appellant-Original Respondent wants to withdraw the Appeal. The Respondents-claimants, however, objecting to the same. The Appellant objecting to the Respondents' withdrawal of the claims.
Though later on, the Respondents did not press the Motion in Appeal for withdrawal of the claim Petition. Section 107 (2) and Order 23 Rule (1) (1) of the CPC cover the issue of withdrawal of Suit and/or Appeal. As the law permits, Appeal can be permitted to be withdrawn at any stage. However, the Appellant, though entitled as of right to withdraw the Appeal yet as the Respondents rights are crystallized, therefore, the Court required to consider the rights and interest of both the parties. In the present case, the Appellant wants to withdraw the Appeal unconditionally. This is not the case of any settlement and/or even the collusion by and between the parties and/or no case of withdrawal of Appeal, with liberty to file afresh. The rights, therefore, so crystallized on the date of confirmation of the award would attain finality, once the Appeal against the Judgment is disposed of, as withdrawn. Therefore, at this stage, the Appellant's submission to permit the withdrawal of Appeal, in view of peculiarity 26/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 27 app732.05.sxw of the situations, we are inclined to permit, but on specific conditions.
This is also for the reason that the learned Judge as confirmed the award which would attain the finality, for and between the parties for all the purposes. The Court, cannot insist upon the Appellant to continue and/or argue and/or prosecute the Appeal. Therefore, the situation and the circumstances and the rights and liabilities so crystallized, would require to be considered from the date of confirmation of the award for the purpose of execution and enforcement of the award. The date of withdrawal of Appeal, in any case, cannot be the date for claiming any rights and/or discharging liabilities based upon the award. This is also in the background that the Arbitration proceedings need not be permitted to use and utilize for exploiting the pendency of Appeal under Section 37 in the Court, specifically when the matters related to and revolving around the share market where the fluctuations of share price are inevitable.
26 The Supreme Court in Jagtar Singh Vs. Pargat Singh & Ors. 4 has observed in paragraph No. 3 that, "By operation of Section 107(2) of the CPC, it equally applies to the appeal and the appellate 4 (1996) 11 SCC 586 27/28 ::: Uploaded on - 15/07/2016 ::: Downloaded on - 16/07/2016 00:01:54 ::: ssm 28 app732.05.sxw Court has co-extensive power to permit the appellant to give up his appeal against the respondent either as a whole or part of the relief."
Hence, the following order:-
ORDER
a) The Appeal is allowed to be withdrawn.
b) However, the financial liability and/or the payment and the reciprocal obligations, for handing over the shares or payment in lieu of shares, of both the parties would be on the basis of the date of confirmation of award i.e. the date of Judgment- 2 February 2005.
c) There shall be no order as to costs.
d) The parties are at liberty to settle the matter.
e) Notice of Motion Notice of Motion No. 1028 of 2016
is not pressed, during the arguments, hence also disposed of in view of withdrawal of the Appeal itself.
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