Bombay High Court
Rahul Bajaj vs Mangal Keshav Securities Ltd. And ... on 15 July, 2016
Bench: Anoop V. Mohta
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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
1/28
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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
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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
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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.
On 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
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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
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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
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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
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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
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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
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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
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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."
1 (1999) 4 SCC 89
ssm 13 app732.05.sxw
"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
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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
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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
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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
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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
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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
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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
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
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
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
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.
ssm 26 app732.05.sxw
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
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
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.
(A.S. GADKARI, J.) (ANOOP V. MOHTA, J.)
