Bombay High Court
Messer Holding Ltd vs Bombay Oxygen Corporation Ltd. ... on 16 March, 2017
Bench: G.S. Patel
Messer Holdings Ltd v Bombay Oxygen Corporation Ltd & Ors
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ATUL
REPORTABLE
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
SUIT NO. 2410 OF 2008
Messer Holdings Limited
a company incorporated under the laws of
British Virgin Islands, having its registered
office at Omar Hodge Building, Wickhams
Cay I, PO Box 362, Road Town, Tartola,
British Virgin Islands and its Indian
correspondence address at 53, Friends
Colony, (East) New Delhi - 110 065 and at A-
38, First Floor, Mohan Cooperative Industrial
Estate, Mathura Road, New Delhi 110 044. ...Plaintiff
~ versus ~
1. Bombay Oxygen Corporation
Ltd
a public limited company registered
under the Companies Act, 1956 having
its Office to 22/B, Mittal Towers, 210,
Nariman Point, Mumbai 400 021.
2. Shyam Madam Mohan Ruia
of Mumbai, Indian Inhabitant, residing
at 96, L Jagmohandas Marg, Mumbai
400 006.
3. Ruia & Co Ltd
a private limited company having its
registered office at Eucharistic Congress
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Building, 8th Floor, 5 Convent Street,
Colaba, Mumbai 400 001
4. Shamun Pvt Ltd
a private limited company having its
registered office at Eucharistic Congress
Building, 8th Floor, 5 Convent Street,
Colaba, Mumbai 400 001.
5. M Ramnarain Pvt Ltd
a private limited company having its
registered office at Eucharistic Congress
Building, 8th Floor, 5 Convent Street,
Colaba, Mumbai 400 001.
6. Smt Chandra Shyam Ruia,
of Mumbai, Indian Inhabitant, residing
at 96, L Jagmohandas marg, Mumbai
400 006.
7. Uma Maharahajsingh Mehta,
of Mumbai, Indian Inhabitant, residing
at 26, Navrang, Colpalrao Deshmukh
Marg, Mumbai 400 020.
8. Tya PP Caps Pvt Ltd
a private limited company having its
registered office at A/30, Nandhham
Industrial Estate, Marol-Marashi Road,
Andheri (East), Mumbai 400 059.
9. Nandini Atul Nathwani
of Mumbai, Indian Inhabitant, residing
at 8-A Jeevan Napean Sea Road,
Mumbai 400 006.
10. Air Liquide Deutschland
GMBH, formerly known as Messer
Griesheim GmbH
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a company incorporated under the laws
of Germany having its principal office at
D-47793, Krefeld, Germany
11. Goyal MG Gases Pvt Ltd
a company registered under the
Companies Act, 1956 and having its
registered office at 53, Friends Colony
(E), New Deli 110 065.
12. Housing Development And
Infrastructure Ltd
a company incorporated under the
provisions of the Companies Act 1956
and having its registered office at 9-01,
Dhiraj Arma, Anant Panekar Marg,
Mumbai 400 052.
13. Union Bank of India
a body corporate constituted under the
Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970
having its head office at 293, Vidhan
Bhavan Marg, Central Office, Nariman
Point, Mumbai 400 021 ...Defendants
A PPEARANCES
FOR THE PLAINTIFF Mr Sreegesh MK, i/b Omkar Mohan
Kulkarni.
FOR DEFENDANT NOS. Mr RA Kapadia, Senior Advocate, with
2 TO 9 KK Shroff, S Prakash, i/b RAK
Najam-es-sani.
FOR DEFENDANT NO. Ms Mohna Lal, with Hemant Mehta & S
10 Nagvadaria, i/b M/s. Mehta & Co.
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FOR DEFENDANT NO. Mr Abhishek Puri, i/b Hassan Ullah
11 Khan.
CORAM : G.S. Patel, J.
JUDGMENT RESERVED ON : 3rd March 2017
JUDGMENT PRONOUNCED ON : 16th March 2017
JUDGMENT:
ARRANGEMENT OF SECTIONS
A. THE PRELIMINARY ISSUE ................................................. 5
B. THE FRAME OF THE SUIT................................................. 6
C. LITIGATION HISTORY & BACKGROUND.......................11
D. PLEADINGS AND EVIDENCE........................................... 34
E. RIVAL SUBMISSIONS AND FINDINGS ........................... 42
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A. THE PRELIMINARY ISSUE
1. This judgment disposes of the following preliminary issue
framed under Section 9A of the Code of Civil Procedure, 1908
("CPC") on 25th August 2016: "Whether any of the reliefs claimed
are barred by limitation?"
2. The attempt by the Plaintiff, made till the very end, to suggest
that limitation cannot be a preliminary issue being a mixed question
of fact and law must be rejected out of hand in view of the Supreme
Court decision in Foreshore Co-operative Housing Society Ltd v
Praveen D Desai & Ors.1 The correctness of Foreshore was questioned
in Jagdish Shyamrao Thorve v Shri Mohan Sitaram (Special Leave
Petition (C) No. 22438 of 2015, order dated 17th August 2015), and
the matter was directed to be placed before the Hon'ble the Chief
Justice of India for constituting a larger Bench, that reference has
not yet been answered. Consequently, Foreshore continues to hold
the field. I did not permit the Plaintiffs' counsel to argue to the
contrary, and I cannot possibly accept their argument that I should
follow the earlier Supreme Court decision in Gunwantibai Mulchand
Shah & Ors v Anton Elis Farel & Ors.2 That is a decision rendered
nine years earlier, and it was not under Section 9A of the CPC, a
provision introduced by the Maharashtra amendment, but under
Order XIV Rule 2 of the CPC.
1 (2015) 6 SCC 412.
2 (2006) 3 SCC 634.
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B. THE FRAME OF THE SUIT
3. The suit relates to 75,001 shares of the 1st Defendant
company. The numbering of the prayers is somewhat peculiar: it
starts, for some reason that I am unable to readily discern, from the
"q" rather than "a". Prayers (q) to (z) are the final prayers. Of these
I will set aside for now the last of these prayers (z), one for damages
and compensation. Clearly, prayers (v), (w), (x) and (y) are within
time. They all refer to documents of 2008 and the suit itself is of
that year. The controversy is about prayers (q) to (u) and these are
the only ones I need to address:
"(q) That this Hon'ble Court be pleased to declare that
the Plaintiff is the beneficial owner of the suit shares being
75001 shares in the 1st Defendant company, more
particularly described in the schedule annexed as Exhibit
A hereto and is entitled to legal ownership thereof;
(r) That the Defendant Nos. 1 to 10 be directed by a
mandatory order and injunction of this Hon'ble Court to
carry out all acts, deeds and things and extend all
cooperation necessary to secure registration of the suit
shares aggregating to 75001 shares in the 1st Defendant
Company, more particularly described in Exhibit A hereto
in the name of the Plaintiff;
(s) That this Hon'ble Court be pleased to declare that
the purported reversion/transfer of the suit shares being
75001 shares in the 1st Defendant Company, more
particularly described in the schedule annexed as Exhibit
A hereto by Defendant No. 10 to Defendants Nos. 2 to 9
under the purported Agreement dated 5th December 2002
is illegal, null and void and of no legal effect;
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(t) That this Hon'ble Court may be pleased to direct
Defendant Nos. 2 to 9 and 10 to deliver up the that the
said Agreement dated 05.12.2002 at Ex: CC for
cancellation and this Hon'ble Court be pleased to cancel
the same;
(u) That this Hon'ble Court be pleased to issue an
Order and injunction restraining Defendant Nos. 2 to 10
from exercising any rights whatsoever in respect of 75001
suit shares (more particularly described in the schedule
annexed as Exhibit A hereto) as also from representing to
the public at large that they are owners of the suit shares or
have any beneficial interest therein;"
4. To understand how the suit lies, I should explain the array of
parties. The 1st Defendant ("Bombay Oxygen") is a public limited
company. It deals in industrial gases. Its shares are listed on the
Bombay Stock Exchange. Defendants Nos. 2 to 9 are individuals and
entities within the Shyam Ruia family ("Ruias"). Defendant No. 10
("Griesheim") is a German Company. It was previously known as
Messer Griesheim GmbH. Defendant No. 12 is a company with
which Bombay Oxygen has apparently entered into a Development
Agreement. That is covered by the remaining prayers that are within
time. Defendant No. 13 is the Union Bank of India in whose favour
Defendant No. 12 has apparently created a mortgage. We are not in
the present proceedings under Section 9A concerned with
Defendants Nos. 12 and 13. Defendant No. 11 ("Goyal Gases") is
also an Indian Company. Griesheim holds 49% of the equity of Goyal
Gases. The rest is held by the Suresh Goyal family and group. The
Plaintiff ("Messer Holdings") is a company incorporated in the
British Virgin Islands. It is a subsidiary of Griesheim, which holds
51% of its equity. The remaining 49% in Messer Holdings is
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controlled by Goyal Gases through its own subsidiary, one Morgan
Trade & Commerce Ltd.
5. The following chart will illustrate the dispute and parties.
6. Messer Holdings challenges a purported reversion or transfer
of 75,001 shares of Bombay Oxygen by Griesheim in favour of Ruias.
Messer Holdings claims that it is the beneficial owner of these
shares, and holds the shares and transfer forms. It was unable to
lodge these because of a restraint order. The challenge in the suit is
to the purported reversion by a Deed of Settlement between
Griesheim and Ruias. This is dated 5th December 2002. Messer
Holdings says that this reversion is wholly illegal and unlawful.
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7. The first prayer is for a declaration of Messer Holdings'
beneficial ownership of these 75,001 shares of Bombay Oxygen. The
next prayer asks for an order to permit registration of these shares.
The next two prayers seek a declaration that the 5th December 2002
Settlement Agreement is null, void and that it be delivered up for
cancellation.
8. Clearly, the suit is for a declaration of Messer Holdings'
interest in title to these shares and consequential prayers of
injunction etc. Thus, to be in time, at least for these reliefs, the suit
would have to be brought within the prescribed period of limitation
from the date when the right to sue first accrued or, at any rate,
when the right to sue accrued to Messer Holdings, the Plaintiff. It
says limitation must computed in respect of all four prayers from the
date when it received a copy of the Settlement Agreement of 5th
December 2002. Admittedly that date is 14th October 2005. The
suit was filed on 23rd April 2008.
9. The Plaintiff led evidence on the preliminary issue. Some
documents were marked and they led the oral evidence of one Mr
KK Dhar but no one else. The Defendants led no evidence.
10. I have heard Mr Sreegesh MK for the Plaintiff, Mr Puri for
Goyal Gases and Mr Kapadia for the Ruias at quite considerable
length over several days. Mr Sreegesh has also placed before me a
rather substantial compendium of submissions and authorities.
Having considered all the material and the law cited, in my
judgment the five prayers (q) to (u) are entirely out of time.
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11. Shortly stated, the matter turns on this: the Plaintiff, Messer
Holdings, knew in 2000 or, at any rate, no later than 2001 that Ruias
had filed a suit claiming these very shares. This was not some mere
idle claim of which Messer Holdings could think to take no notice.
Messer Holdings was aware of both Suits. It was sought to be joined
to the 2000 suit by an amendment and it was made a Defendant to
the second suit filed in 2001 by the Ruias. It sought impleadment
itself. I will examine the claims in these Suits, but it seems to me
that irrespective of the fact that both Suits were later held by the
Supreme Court to be utterly frivolous, that subsequent decision
cannot alter the fact that the two suits nonetheless represented a
very real, eminent and proximate infringement of, or, at any rate, a
clear and unequivocal threat to Messer Holdings' rights in respect
of these shares. I cannot accept Mr Sreegesh's argument that no suit
was necessary by Messer Holdings until such time as there was
written documentation between Griesheim and the Ruias, and
Messer Holdings was made aware of this. It is equally impossible to
accept his submission that there can ever be a class of civil suits to
which no limitation applies. I have also rejected as untenable his
submission that the mere filing of a suit is no more than a claim and
that though, by virtue of being made a party, Messer Holding knew
that its rights over these shares were being infringed or threatened,
it did not need to file a suit of its own. Limitation ceases running
only in two situations: on the filing of a suit, or on the grant of an
anti-suit injunction. Consequently, I have held for the contesting
Defendants, the Ruias, and against the Plaintiffs, Messer Holdings
that prayers (q) to (u) are time barred.
12. Central to this entire discussion is, first, pinpointing Messer
Holdings' date of knowledge of the Ruias' claim. The second stage
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of enquiry will be to see whether this knowledge gave rise to a cause
of action or, in the words of the Limitation Act, a 'right to sue'. For
this, a few dates and events are necessary. The record itself is by
now sprawling and runs into several hundred if not several thousand
pages. I will confine myself to these dates as are immediately
necessary.
C. LITIGATION HISTORY & BACKGROUND
13. On 12th May 1995 Griesheim, a company in the international
Hoechst Group, entered into a Share Purchase and Cooperation
Agreement ("SPCA") with Goyal Gases, then known as Goyal
Gases Limited. Griesheim agreed to take up equity in Goyal Gases.
It did so. The name of the company was changed to the present
name, Goyal MG Gases Pvt Ltd. The Agreement provided that
Goyal Gases would from that point on be a member of Griesheim
Group. Griesheim first acquired 30% of Goyal Gases' equity. This
was later increased to 49%. The Agreement provided for a gradual
reduction as well, and the Agreement was to continue till Griesheim
or its successors-in-law reduced their equity holdings in Goyal
Gases to 25%.
14. Two years later, on 27th June 1997 Griesheim entered into a
Share Purchase Agreement ("SPA") with the Ruias. The Ruias are
the original founders of Bombay Oxygen. Griesheim agreed to
purchase 40,001 shares of Bombay Oxygen at Rs. 3,000/- per share
for a total of Rs. 13,50,03,000/-. The shares taken up would
represent 30% of the equity of Bombay Oxygen, plus one share.
Clause 1.2 of this Agreement said that the Ruias would within two
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years of the effective date, sell sufficient shares to increase
Griesheim's shareholding to 75,001 shares (50% of the paid up
capital and one share). Griesheim was also free to purchase
additional equity from the public. The SPA had a First Refusal
Clause 6.1, but this did not apply to any sale of the shares by
Griesheim to a company from its parent group, the Hoechst Group.
15. On 25th August 1998 Griesheim paid the entire consideration
of Rs 13.04 crores to Ruias. Griesheim's nominees were appointed
to Bombay Oxygen's board. Griesheim took over the management of
Bombay Oxygen. Goyal Gases moved the Delhi High Court against
Griesheim from getting any shares in Bombay Oxygen, saying this
violated the non-compete clause in the 1995 SPCA between
Griesheim and Goyal Gases. Goyal said this on the basis that
Griesheim's investment in Bombay Oxygen constituted a violation
of the non-compete clause. By its order dated 18th December 1998,
the Supreme Court permitted Griesheim to purchase and pay for
additional shares of Bombay Oxygen acquired from the public but
restrained Griesheim from getting these shares registered in its
name. By a later order dated 8th February 1999 the Supreme Court
held that since Ruias had been paid, the question of ownership and
registration would be decided in arbitration proceedings between
Griesheim and Goyal Gases. By this time, Griesheim had paid for
45,001 shares of Bombay Oxygen purchased from the Ruias and
another 30,000 shares of Bombay Oxygen bought from the public.
16. On 28th April 1999, following an order it obtained from the
Supreme Court a few days earlier, Ruias filed suit No. 2499 of 1999
in this Court. Here, it sought enforcement of the 1997 SPA's right of
refusal clause 6.1. The Ruias filed Notice of Motion No. 1804 of
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1999 in this suit seeking to restrain Griesheim and Goyal Gases from
breaching the right of first refusal clause.
17. On 6th May 1999, this Court issued a restraint order in these
terms against Griesheim and Goyal Gases. On 9th June 1999 this ad-
interim order was continued.
18. Griesheim's nominees on the Board of Directors of Bombay
Oxygen continued till 30th September 1999. Disputes arose between
Griesheim and Ruias regarding the appointment of one or more of
Griesheim's nominations to Bombay Oxygen's board.
19. On 20th January 2000, Messer Holdings was incorporated in
the British Virgin Islands as Griesheim's wholly owned subsidiary.
The avowed purpose of setting up Messer Holdings was to settle the
parallel dispute between Griesheim and Goyal Gases without
violating the right of first refusal clause 6.1 in Grieshem's SPA with
the Ruias. The intention was to transfer the 75,001 shares to Messer
Holdings since Clause 6.1 allowed a transfer to a company in the
Hoechst Group. This would not have been, the parties were
advised, in violation of the restraint order of the Supreme Court
passed on 18th December 1998. At the time Griesheim held 51% of
Messer Holdings' equity. The remaining 49% was controlled by
Goyal Gases through one of its subsidiaries, Morgan Trade and
Commerce Ltd.
20. On 24th January 2000, the Ruias filed Chamber Summons
No. 80 of 2000 to amend their suit No. 2499 of 1999. They sought
to incorporate a plea that if Clause 6.1 (the First Refusal Clause) in
the SPA of 23rd June 1997 between Griesheim and the Ruias was
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found to be void, Griesheim be directed to return to the Ruias all
75,001 shares of Bombay Oxygen. This Court allowed the
amendment on 22nd February 2000. Griesheim then filed an
Affidavit of 27th January 2000 in the Ruias' Notice of Motion
undertaking not to breach the First Refusal Clause 6.1 of the SPA. It
also sought that the restraint orders dated 6th May 1999 and 9th
June 1999 be vacated on the ground that that orders travelled beyond
Clause 6.1. On 29th February 2000, accepting the undertaking by
Griesheim that it would abide by Clause 6.1 of the SPA, this Court
disposed of the Ruias' Notice of Motion No. 1804 of 1999. It
directed Griesheim and Goyal Gases not to implement or enforce
any arbitral Award without leave of the Court. The parties were left
at liberty to adopt appropriate proceedings to enforce their
respective rights.
21. On 13th March 2000, Griesheim and Goyal Gases agreed on
the broad terms of a settlement of their disputes (then pending
arbitration) relating to the 75,001 equity shares of Bombay Oxygen.
Messer Holdings contends that in terms of this understanding
Griesheim undertook to transfer these 75,001 shares of Bombay
Oxygen to Messer Holdings for a consideration of DM 10 million
equivalent to Euro 5,112,918.82. Griesheim agreed to deliver the
actual share scrips of Bombay Oxygen to Messer Holdings with duly
executed transfer and proxy forms. The terms of this understanding
were concluded on 13th March 2000. On 20th May 2000,
Griesheim is said to have delivered the physical share scrips for
75,001 shares of Bombay Oxygen to Messer Holdings along with
share transfer forms. On 8th August 2000, Messer Holdings paid
DM 10 million to Griesheim as consideration for purchase of these
shares. Griesheim confirmed receipt.
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22. On 24th August 2000 -- and this date is immediately
material for the present purpose -- the Ruias filed Chamber
Summons No. 1005 of 2000 to amend their suit No. 2499 of 1999.
The Ruias sought to introduce a relief relating to their termination
of 23rd June 1997 SPA with Griesheim. Importantly, by that very
amendment, the Ruias sought to implead Messer Holdings as a
Defendant to that suit. The amendment was finally allowed on 4th
October 2002. Therefore, at least from the date of service of the
Chamber Summons, or at any rate from the date of the order,
Messer Holdings knew or must be deemed to have known of the
Ruias' claim to the 75,001 suit shares.
23. On 9th August 2000 Griesheim and Goyal Gases jointly
applied to the Arbitral Tribunal for a consent Award. The
application recorded that the process of transfer of the Bombay
Oxygen shares to Messer Holdings was complete and that
Griesheim had received full consideration. Griesheim agreed that
until the shares were registered to Messer Holdings, Griesheim
would hold them shares in trust. The Arbitral Tribunal passed a
consent Award on 21st September 2000. The consent Award was in
the terms mentioned earlier, but it also records that Griesheim
would give necessary approvals and authority to Messer Holdings to
implement the Award including taking steps to register the suit
shares. Griesheim delegated these powers and rights in respect of
these shares to Messer Holdings.
24. On 6th October 2000, Griesheim filed Notice of Motion No.
2933 of 2000 in the Ruias' suit No. 2499 of 1999. It sought leave to
implement and enforce the consent Arbitral Award. At about the
same time, on 10th November 2000 Goyal Gases filed Notice of
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Motion No. 3230 of 2000 in the Ruias' suit No. 2499 of 1999. In
this, Goyal Gases too sought leave of the Court to implement and
enforce the consent Award.
25. We come now to 5th February 2001. This is a crucial date, for
it was on this date that the Ruias filed a second suit No. 509 of 2001
in this Court. In this suit, the Ruias sought a rescission of the 23rd
June 1997 SPA between them and Griesheim on the ground that the
SPA and the transfer of the Bombay Oxygen shares to Griesheim
were both vitiated by misrepresentation. Messer Holdings was
joined as a party to this suit. The Ruias filed Notice of Motion No.
392 of 2001 seeking a restraint against, and again this is important,
Goyal Gases and Messer Holdings from exercising any rights as the
beneficial owners of these shares.
26. This would be an opportune moment to consider the precise
reliefs that the Ruias sought in these two Suits. These are the reliefs
in Ruias' suit No. 509 of 2001:
"(a) for a declaration that the Share Purchase Agreement
dated 23rd June 1997 is liable to be rescinded;
(b) for an order of this Hon'ble Court directing the said
Share Purchase Agreement dated 23rd June 1997 be
rescinded;
(c) that in the alternative to prayers (a) and (b) above,
for a declaration that the Share Purchase Agreement dated
23rd June 1997 was voidable and has been validly avoided
by the Plaintiffs;
(d) that in the alternative to prayers (a), (b) and (c)
above, for a declaration that the Share Purchase
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Agreement dated 23rd June 1997 was terminable by the
Plaintiffs and has been validly terminated by the Plaintiffs;
(e) that in the alternative to prayers (a), (b), (c) and (d)
above, for a mandatory order and direction by this
Hon'ble Curt, directing the 1st Defendant to offer the
75,001 shares to the Plaintiffs in accordance with the
procedure prescribed in Clause 6.1 of the Share Purchase
Agreement dated 23rd June 1997;
(f) for a declaration that the acquisition of the said
30,000 shares pursuant to the Public Offer is illegal,
unlawful, null and void and of no legal effect whatsoever;
(g) for a declaration that the said Agreement dated 17th
February 2000 and the said Consent Award dated 21st
September 2000 are not binding on the Plaintiffs and/or
Defendant No. 2 and/or that the same are illegal, null and
void;
(h) for a permanent injunction restraining the defendant
No. 1, 3 and 4 from:
(i) acting in pursuance of the Share Purchase
Agreement dated 23rd June 1997;
(ii) exercising any rights in respect of the said
75,001 shares (in particular voting rights in
connection therewith) and/or from receiving any
dividends, rights in respect of the same;
(iii) exercising any rights including its beneficial
ownership in, to, upon or in respect of the said
75,001 shares;
(i) that the Defendants be restrained by permanent
order and injunction of this Hon'ble Court from
transferring and/or registering and/or taking any steps to
transfer and/or register the said 75,001 shares in the name
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of any person or persons firm or body corporate including
1st and/or 3rd and/or 4th Defendants, without the
consent of the Plaintiffs;
(j) that the 1st Defendant be ordered and decreed to
deliver/return to the respective plaintiffs the said 45,001
shares together with all accretions thereto from 23rd June
1997 on such terms as this Hon'ble Court directs;
(k) for the purpose aforesaid the 1st Defendant be
ordered and decreed to do and perform all acts, deeds,
matters and things and to execute all documents, deeds
and writings in furtherance thereof;"
27. As we have seen, the Ruias' previous suit No. 2499 of 1999
was repeatedly amended. There were, however, in that suit matters
that even as of 2001 are important to the present issue. Messer
Holdings was impleaded to suit No. 2499 of 1999 by an order of 4th
October 2002. As of that date, the suit included a prayer for return
to the Ruias 45,001 shares with all accretions. Prayer (b)(iv) also
sought an injunction restraining any transfer of the 75,001 shares of
Bombay Oxygen in the name of any entity or person without the
Ruias' consent and, in prayer (b)(v) a restraint against any of the
Defendants (by that time which included Messer Holdings) from
exercising any beneficial rights in respect of those 75,001 shares. For
completeness, here are the prayers in the first suit No. 2499 of 1999:
(a)(i) For a declaration that the acquisition of the said
30,000 shares pursuant to the public offer is illegal, null and
void and of no legal effect whatsoever.
(ii) For a permanent order and injunction restraining the
defendants from exercising any rights in respect of the said
30,000 shares including and in particular voting rights;
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(b)(i) for a declaration that the said agreement dated 23rd
June 1997 (Exhibit -B hereto) stands validly terminated
and/or avoided.
(b)(ii)(a) that it be declared that Defendant Nos. 3 to 5
have no right, title or interest of any nature whatsoever in
(b)(ii)(b) that in the alternative to prayer (b)(ii) this
Hon'ble Court be pleased to order and direct the
Defendant Nos 1 and 3 to 5 to deliver to the respective
Plaintiffs 45001 shares of Defendant No. 2 as also to return
to the respective members of the public the 35000 shares;
(ii) that the defendant Nos. 1 3, 4 and 5 be ordered and
decreed to deliver/return to the respective plaintiffs the
said 75,001 shares together with all accretions thereto from
23rd June, 1997 on such terms as this Hon'ble Court
directs.
(iii) for the purpose aforesaid the defendant Nos. 1, 3 4
and 5 be ordered and decreed to do and perform all acts,
deeds, matters and things and to execute all documents,
deeds and writings in furtherance thereof.
(b)(iii)(a) that in the event of the Defendants Nos 1 and
3 to 5 failing to deliver to the Plaintiffs the said 75001 shares
of Defendant No. 2 the same be cancelled and Defendant
No. 2 be ordered and directed to issue duplicate shares in
the name of the Plaintiffs
(iv) for a permanent order and injunction restraining the
Defendants 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 person, firm or body
corporate including the 1st and/or 3rd and/or 4th
defendants without the consent of the plaintiffs;
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(v) for a permanent order and injunction restraining
defendant nos 1, 3 and/or 4 and 5 from exercising any
rights, including as beneficial owner in, to, upon or in
respect of the said 75,001 shares.
a(1)(i) In the alternative and in the event of prayer
(b) not being granted that it be declared that the negative
covenant in Clause 6.1 of the agreement dated 23rd June
1977 being Ex. 'B' hereto is binding on the Defendants:
(a)(1)(ii)(b) that the Defendants by themselves their
agents and servants be restrained by a perpetual order and
injunction of this Hon'ble Court from
(i) committing breach of clause 6.1 of the
Agreement dated 23rd June 1977 being Exh. 'B'
hereto;
(ii) transferring or selling or alienating the legal
and/or beneficial interest in the shares of Defendant
No.2 including those mentioned in Ex. 'A' hereto
without first offering the same to the Plaintiffs in
terms of Clause 6.1 of the Share Purchase
Agreement dated 23rd June 19976, being Exh. 'B'
hereto.
(iii) obtaining any award, decree, order from any
forum or court in violation of Clause 6.1 of the Share
Purchase Agreement dated 23rd June 1997, being Ex
'B' hereto:
(iv) making any claim before the Arbitrators or
any court which if granted will amount to a breach or
violation of the provisions of Clause 6.1 of the said
Share Purchase Agreement dated 23rd June 1997,
being Ex. 'B' hereto;
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(v) procuring any breach of the provisions of
clause 6.1 of the said Share Purchase Agreement
dated 23rd June, 1977 being Ex. 'B' hereto;
(b1)(a) In the alternative and in the event of prayer (b) not
being granted and in the event of it being held that the said
agreement is void, defendant Nos. 1, 4 and 5 be ordered and
decreed to deliver/return to the respective Plaintiffs the
said 45001 shares together with all accretions thereto from
23rd June 1977 on such terms of this Hon'ble Court may
direct.
(b) For the purpose aforesaid defendants Nos. 1, 4 and 5
be ordered and decreed to do and perform all acts, deeds,
matters and things and to execute all documents, deeds and
writings in furtherance thereof.
28. These are important because this is the point in time on
which Messer Holdings was aware in the clearest possible way of
the Ruias' claim to the same shares. This was no idle claim or boast.
This was a court proceeding. If it succeeded, Messer Holdings'
rights would have been infringed. The suit itself represented the
clearest and most unambiguous threat to Messer Holdings' rights.
The question will be whether or not Messer Holdings was bound to
take action by filing a suit (or perhaps a counter-claim) within three
years of this date to assert its right to these shares against the Ruias.
Consequently, two questions will then fall for consideration:
Whether these events gave Messer Holdings the right to sue; and
whether time began running against Messer Holdings from either of
these dates, i.e., when it was joined as a party-Defendant to the
Ruias' previous suit (or serve with notice of that application) or, at
any rate, from the date it was served with the Ruias' second suit.
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29. On 11th April 2002 Messer Holdings itself filed Chamber
Summons No. 455 of 2002 seeking its impleadment in the Ruias'
first suit No. 2499 of 1999. Till this time the Ruias' application for
impleading Messer Holdings had not been allowed. Messer
Holdings did not diligently prosecute this Chamber Summons. It
was dismissed for non-prosecution on 6th June 2006. That matters
little; what matters is that it knew of a clear threat to its title and
therefore sought impleadment.
30. On 13th March 2003, a raft of interim applications were on
board and were called out. There were Notices of Motion by Goyal
Gases, Grieshem, Ruias and Messer Holdings. Counsel for the
Ruias said that as between the Ruias and Griesheim the disputes had
been settled. This is the third critical date. Messer Holdings today
contends that the terms of the settlement were undisclosed and
remain undisclosed for several years thereafter and that neither
Ruias nor Griesheim produced the Settlement Agreement. It seems
to me, however, that the statement made to Court was sufficient to
constitute a direct threat to the right claimed by Messer Holdings.
This could no longer be termed a mere claim or an ambiguous
threat. Ruias and Griesheim were both telling the Court that they
had settled their disputes in relation to these very shares. This was
said despite Griesheim having transacted with Messer Holdings for
these very shares, i.e., having delivered those shares to Messer
Holdings (according to the Plaintiffs) and received payment for that
(according to the Plaintiffs). Surely the terms of the Settlement
Agreement were irrelevant, and Messer Holdings can be hardly
heard to say that the challenge to the Settlement Agreement turned
on the terms of that Agreement between the Ruias and Griesheim.
From Messer Holdings' perspective, these terms of Settlement,
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whatever they may have been, were entirely irrelevant. The fact of
the settlement between Ruias and Griesheim was sufficient and, I
am unable to see how Messer Holdings could treat this as not
affecting it. It was also possible for Messer Holdings to file a
substantive suit seeking a declaration -- as indeed it only now does
-- of its entitlement to these shares and saying that any settlement
or agreement to the contrary between Ruias and Griesheim was not
binding on it.
31. At this stage, I must also note that the settlement between the
Ruias and Griesheim is dated 5th December 2002. Messer Holdings
maintains that it was not given a copy of this document till 14th
October 2005. As we shall see, that date is largely immaterial.
32. On 17th March 2003, Goyal Gases filed an Affidavit in Ruias'
first suit No. 2499 of 1999 asking for a disclosure of the terms of this
Agreement or a production of that document. This again is
significant because 49% of Messer Holdings was controlled by Goyal
Gases through his wholly owned subsidiary, Morgan Trade &
Commerce Limited.
33. Messer Holdings accepts even before me today that Ruias
throughout canvassed their case that the initial transfer of the
Bombay Oxygen shares to Griesheim was vitiated by
misrepresentation, and, second, Griesheim's acquisition of
remaining 30,000 shares violated SEBI Regulations. On this basis
Ruias sought interim protection. This argument was strenuously
canvassed before the Court. It seems to have resulted in a dismissal
on 26th March 2003 of the two Notices of Motion filed by Goyal
Gases in Ruias' first suit No. 2499 of 1999 as also Messer Holdings'
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Notice of Motion of 2002 in Ruias' second suit No. 509 of 2001.
Most interestingly Griesheim did not press its own Notice of
Motion No. 2933 of 2000 filed in Ruias' first suit No. 2499 of 1999
seeking leave to enforce the ICC arbitral consent Award of 21st
September 2000 between Goyal Gases and itself. It was that Award
which held that the suit 75,001 shares were vested in Messer
Holdings and that it was Messer Holdings that was the beneficial
owner of these suit shares. Messer Holdings was a party by then to
both Suits filed by Ruias. It could not have been unaware of this
order. There is a compilation placed before me. A copy of this order
is included in that compilation from pages 102 onwards (SA Bobade
J, as he then was). Griesheim, Goyal Gases were both before the
Court. There appears to have been a typographical error which was
corrected on 2nd May 2003. It is not in doubt that Messer Holdings
filed Appeal No. 855 of 2003 against the order of 26th March 2003.
34. There is, at about this time, a piece of evidence and that is an
entry on the US Securities Exchange Commission ("SEC") website
about the Ruias reverting, transfer or purchase these very 75,001
shares of Bombay Oxygen. This is the subject matter of the cross-
examination on the preliminary issue and I will return to this later in
this judgment.
35. Between April and June 2005 there followed some
correspondence in which Messer Holdings asked for a copy of the
Settlement Agreement. Messer Holdings also filed a Notice of
Motion in its own Appeal demanding disclosure. This Notice of
Motion was opposed. Ultimately on 28th September 2005 the
Division Bench directed the Ruias to disclose the agreement, and
this takes us to 14th October 2005. This is the date when, according
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to Messer Holdings, a copy of the Settlement Agreement of 5th
December 2002 was first furnished to it. Now that Settlement
Agreement says nothing more than what the Ruias and Griesheim
was saying all along, viz., that the Ruias and Griesheim had retained
their SPA and the 75,001 suit shares reverted to Ruias. The fact that
in the Settlement Agreement Ruias gave up their case of violation of
the SEBI Regulations is largely irrelevant. In any case, it furnishes
Messer Holdings no cause of action distinct, separate or
independent of that which arose earlier.
36. On 5th December 2005, Messer Holdings filed a Notice of
Motion in its Appeal now saying that since there was a Settlement
Agreement Ruias' suit was infructuous and was liable to be
dismissed. The Ruias opposed this Notice of Motion. They also
filed a Chamber Summons to amend their first suit No. 2499 of 1999
by adding a prayer for delivery of the 75,001 shares from Messer
Holdings, Goyal Gases and Mr Suresh Goyal, the Chairman and
Managing Director who was now joined as Defendant No. 5. The
Ruias invoked the Settlement Agreement of 5th December 2002.
The Chamber Summons was allowed on 8th June 2011. The Ruias
filed a substantially similar Chamber Summon no. 712 of 2007 in
their second suit No. 509 of 2001.
37. On 4th August 2008 Ruias entered into a Development
Agreement with HDIL, but, as I said earlier, I am not concerned
with this. This suit was filed on 23rd April 2008 for the reliefs that I
have set out earlier.
38. On 1st September 2010, the Appeal Court by an elaborate
judgment of 102 pages dismissed all Appeals including Appeals filed
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by Messer Holdings. At the request of the parties, the previous
interim order was continued for a period of two weeks.
39. Both Goyal Gases and Messer Holdings filed Special Leave
Petitions before the Supreme Court. On 10th December 1010 the
Supreme Court directed the parties to maintain status quo. In view
of that the suit was adjourned sine die on 13th July 2014.
40. On 19th April 2016 the Supreme Court delivered a detailed
judgment saying that the Ruias' two Suits were infructuous. The
Special Leave Petitions were, therefore, dismissed. Some
observations of the Supreme Court are important. These are set out
below, noting that the Supreme Court decision referred to three
Suits: "SUIT-I" is a reference to Goyal Gases' separate Civil suit
filed in the Delhi High Court; "SUIT-II" is a reference to the Ruias'
suit No. 2499 of 2999; and "SUIT-III" is a reference to the Ruias'
second suit No. 509 of 2001. The judgment sets out the relevant
prayers in the Ruias' second suit, the amendments to the first suit
and the relevant portions of Settlement Agreement of 5th October
2012. There is also a reference to "SUIT-IV", namely, the present
suit No. 2410 of 2008 (paragraph 26). By this time, Goyal Gases had
withdrawn its suit in the Delhi High Court. That left "SUIT-II"
(suit No. 2499 of 1999), "SUIT-III" (suit No. 509 of 2001), and
"SUIT-IV" (i.e., the present suit). Paragraphs 32 to 40 of the
Supreme Court judgment reads thus:
"32. SUITS II and III filed by the RUIAS are pending as
of today. The substance (RUIAS amended the said suits
from time to time we find it a little difficult to understand
the legality and the purpose of the SUIT-II and its
amendment subsequent to the filing of the SUIT-III. We do
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not wish to examine those questions as such enquiry would
be purposeless at this stage in view of the subsequent
developments.) of SUIT-II is that RUIAS do not want
MGG to transfer any of the shares of BOCL acquired by
MGG pursuant to AGREEMENT-II in favour of either
GGL or MHL or any other person without first offering
them to RUIAS. Such a transfer in the opinion of RUIAS
would be in violation of Clause 6.1 of the AGREEMENT-
II.
Coming to SUIT-III, RUIAS want to wriggle out of
the AGREEMENT-II and therefore, the various alternative
prayers! in substance seeking to nullify the acquisition of
75001 shares by MGG under AGREEMENT-II. (Prayers
(a) to (f) of suit-III (see para 17 supra)). They also rely upon
the events subsequent to 23.06.1997 - transactions between
GGL and MGG etc. and seek various prayers which are
already noticed. (Prayer (b) to (k) of suit III (see para 17
supra)). Having filed SUIT-III, RUIAS once again
amended the SUIT-II enlarging the scope of the suit.
Whether such amendments are legally tenable or not is a
question to be examined from the point of view of the
principles governing the law on the question of joinder of
causes of action etc. Apart from that the continuance of the
SUIT-II and SUIT-III simultaneously raises too many
questions regarding their maintainability.
However, in our view, such questions need not be
examined because RUIAS and MGG entered into an
agreement dated 05.12.2002 the gist of which is noticed
earlier at para 20 (supra). By the said agreement, RUIAS
also agreed not to prosecute SUITS-II and III insofar as the
suits pertain to "MGG or its affiliates ..." etc.
"(a) not to prosecute the following proceedings
pending in the Bombay High Court and in the
Supreme Court of India against "MGG" or its
affiliates or its directors, officers or employees
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(excluding "MHL" and Goyal MG Gases Ltd. but
including directors nominated by "MGG" on the
Board of "MHL" and/or Goyal MG Gases Ltd.);
(i) Civil suit No. 2499 of 1999 titled Shyam
Madan Mohan Ruia & Ors v Messer Griesheim
GmbH & Ors.
(ii) Civil suit No. 509 of 2001 titled Shyam
Madan Mohan Ruia & Ors v Messer Griesheim
GmbH & Ors."
As a matter of fact, during the course of hearing of these
SLPSs also, both RUIAS and MGG supported the case of
each other in opposing these SLPs filed by MHL and GGL.
33. As a consequence of the settlement dated 5.12.2002,
RUIAS claim title in 75001 shares of BOCL through MGG.
We have already noticed, the said 75001 shares were
initially acquired by MGG from RUIAS and the public
under AGREEEMNT-II. But, so far the names of RUIAS
are not entered in the registers of BOCL, as the holders of
the share because of the various interim orders mentioned
earlier.
34. However, GGL and MHL dispute the title of MGG
to the said 75001 shares. According to GGL and MHL, by
the settlement dated 5.12.2002 MGG had itself lost its title
over the said shares as it had already transferred its title in
the said shares in favour of MHL pursuant to the consent
award dated 21.9.2000.
35. The existence of title in MGG in the said 75001
shares cannot be disputed by either GGL or MHL, at least,
till the date of the consent award, i.e., 21.9.2000 because
GGL and MHS's claim for title over the said shares flows
from MGG's prior tile and the subsequent alleged transfer
pursuant to the consent award. In such a case, because of
MGG's purported transfer of the title in the 75001 shares
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to RUIAS under the settlement dated 5.12.2002. RUIAS
should normally be entitled to have their names entered
into the records of BOCL as holders of the said shares by
following appropriate procedure. If either GGL or MHL is
objecting to the right of MGG to effect the said transfer in
favour of RUIAS, they must establish a superior title (to
MGG) in the said shares. It goes without saying that it can
be done only in some legal action initiated by either GGL or
MHL or both jointly. But they cannot seek a declaration of
their title in the SUITS-II and III filed by the RUIAS. In a
bid to establish their title MHL filed SUIT-IV. (See prayer
(q) in SUIT IV (extracted at para 26 supra)). The right of
MHL, if any, will have to be decided in the said suit. Until
the said suit is decided, we do not see any ground in law on
which either GGL or MHL can object to the transfer of the
shares in favour of RUIAS pursuant to the settlement dated
5.12.2002.
36. What exactly is the procedure which RUIAS are
required to follow to effectuate the transfer of shares
pursuant to the settlement dated 5.12.2002 is for RUIAS to
explore. Because during the long pendency of the instant
litigation there is a considerable change in the law regarding
the procedure governing the transfer of shares in
companies by virtue of amendments in the Companies Act
1956 and the advent of the Depositories Act 1996 etc. We
make this observation because the 75001 shares acquired by
MGG pursuant to AGREEMENT-II could not be
registered in the name of MGG (See para 7 and 11(a) of the
settlement dated 5.12.2002 extract at para 20 supra)
because of the various interim orders passed by various
Courts at different stages in SUITS-I, II and III. SUIT-I
was withdrawn by the plaintiff (GGL). In view of the
subsequent settlement dated 5.12.2002 between MGG and
RUIAS, no dispute survives between MGG and RUIAS.
Therefore, SUITS-II and III are required to be dismissed as
without any cause of action insofar as MGG and its officers
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etc., neither MHL nor GGL can compel RUIAS to
prosecute those suits.
37. Then we are left with the questions of continuance
of SUITS II and III against the other defendants (GGL &
MHL etc.) and the prayers regarding the physical custody
of the shares. (There is no whisper in the plaints of either
suit II or III, of MGG having had obtained the custody of
the share certificates either from RUIAS (of 45001 shares)
or from the public (of 30000 shares).) As already noticed
from the settlement dated 5.12.2002, MGG and RUIAS are
uncertain about the whereabouts and custody of 75001
shares! Of BOCL which were initially acquired by MGG.
(See paras 6 and 7 of the settlement dated 5.12.2002
extracted at page 20 supra). RUIAS having entered into
settlement dated 5.12.2002 knowing fully well that MGG
was not going to give custody of the above-mentioned
75001 shares, purported to purchase the said shares and
agreed not to prosecute the SUITS-II and III against MGG.
In such a case, continuing the suits either against GGL or
MHL or its agents etc. only for the custody of the shares, in
our opinion, is without any cause of action on the part of
the RUIAS. The prayers in SUIT-II and III in this regard
are:
"(ii) that the defendant Nos. 1, 3, 4 and 5 be
ordered and decreed to deliver/return to the
respective plaintiffs 75,001 shars together with all
accretions thereto from 23rd June, 1997 on such
terms as this Hon'ble Court directs.
--SUIT-II
(j) that the 1st defendant be ordered and decreed to
deliver/ return to the respective plaintiffs the said
45,001 shares together with all accretions thereto
from 23rd June 1997 on such terms as this Hon'ble
Court directs.
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--SUIT-III
i.e. for a declaration in favour of RUIAS that they are
entitled to the recovery of 75001 shares jointly against
MGG, GGL and MHL etc. RUIAS having agreed not to
prosecute the suits against MGG cannot continue the suits
against other defendants in the suits whose claim (if any)
rests on the right and title of MGG.
The continuance of the SUITS-II and III, in our
opinion, is, therefore, wholly without any cause of action
and an abuse of the judicial process.
Therefore, these SLPs filed by MHL and GGL
purportedly aggrieved by the impugned orders passed in
the various applications filed in the two suits filed by
RUIAS become infructuous. Therefore, the said SLPs
arising therefrom are dismissed.
38. The consequent factual position would be:
(i) the legal rights acquired (whatever they are) by
MGG in 45001 shares of BOCL purchased from
RUIAS pursuant to AGREEMENT-II should
revert back to RUIAS unless it is found that the
purported transfer of 45001 shares by MGG
pursuant to the consent award dated 21.09.2000
in favour of MHL created any right or interest in
favour of MHL. Such a claim of MHL can only be
examined in SUIT-IV filed by MHL.
(ii) Another 30000 shares were acquired by MGG from
the public pursuant to AGREEMENT-II MGG
purported to transfer them by virtue of the
settlement dated 05.12.2002 in favour of RUIAS. If
either GGL or MHL has any claim over those
shares, such a claim must be made and
established by them in accordance with law, but
not in the suits filed by RUIAS. In order to
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establish such a claim, MHL already filed SUIT-
IV to which both GGL and MGG are parties
apart from Goyals and others.
39. However, in the absence of any legally
established title as on today to the abovementioned
shares in any party other than MGG (Even MGG's
claim was that they had only a beneficial interest in the
said shares, as the shares were never registered in the
name of MGG.), whether RUIAS would be entitled
pursuant to the settlement dated 05.12.2002 to have
their names entered into the registers of the BOCL as
holders of the said shares is a matter for RUIAS to
explore. (There is no prayer in the Suits II and III seeking
the declaration of title of RUIAS based on the settlement
dated 05.12.2002 - for that matter, there is no whisper
about the said settlement!). However, such an entitlement
if any should be subject to the result of the SUIT-IV.
40. We make it clear that we are not deciding by this
order, the existence or otherwise of any right or its
enforceability in the 75001 shares of BOCL in favour of
either MHL or GGL. It is open to the to establish their
right in SUIT-IV. The defendants in the SUIT-IV are at
liberty to raise every defence available in law and fact to
them."
(Emphasis added)
41. The Supreme Court then opined that an examination of the
various questions raised in the Special Leave Petitions was
unnecessary. In paragraph 43 it said thus:
"43. The net effect of all the litigation is this. For the last
18 years, the litigation is going on. Considerable judicial
time of this country is spent on this litigation. The conduct
of none of the parties to this litigation is wholesome. The
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instant SLPs arise out of various interlocutory proceedings.
Arguments were advanced on either side for a period of
about 18 working days as if this Court were a Court of
Original Jurisdiction trying the various above-mentioned
suits. The fact remains that in none of the suits even issues
have been framed so far. The learned counsel appearing for
the parties very vehemently urged that there should be a
finality to the litigation and therefore this Court should
examine every question of fact and law thrown up by the
enormous litigation. We believe that it is only the parties
who are to be blamed for the state of affairs. This case, in
our view, is a classic example of the abuse of the judicial
process by unscrupulous litigants with money power, all in
the name of legal rights by resorting to half-truths,
misleading representations and suppression of facts. Each
and every party is guilty of one or the other of the above-
mentioned misconducts. It can be demonstrated (by a more
elaborate explanation but we believe the facts narrated so
far would be sufficient to indicate) but we do not wish to
waste any more time in these matters."
42. The Supreme Court ended with this admonition:
"44. This case should also serve as proof of the abuse of
the discretionary Jurisdiction of this Court under Article
136 by the rich and powerful in the name of a 'fight for
justice' at each and every interlocutory step of a suit.
Enormous amount of judicial time of this Court and two
high Courts was spent on this litigation. Most of it is
avoidable and could have been well spent on more
deserving causes.
This Court in Ramrameshwari Devi & Others v
Nirmala Devi & Others, (2011) 8 SCC 249 observed at
para 54;
"54. While imposing costs we have to take into
consideration pragmatic realities and be realistic as to
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what the defendants or the respondents had to actually
incur in contesting the litigation before different
courts. We have to also broadly take into
consideration the prevalent fee structure of the lawyers
and other miscellaneous expenses which have to be
incurred towards drafting and filing of the counter-
affidavit, miscellaneous charges towards drafting and
filing of the counter-affidavit, miscellaneous charges
towards typing, photocopying, court fee, etc."
45. We therefore, deem it appropriate to impose
exemplary costs quantified at Rs. 25,00,000.00 (Rupees
Twenty Five Lakhs only) to be paid by each of the three
parties i.e. GGL, MGG and RUIAS. The said amount is to
be paid to National Legal Services Authority as
compensation for the loss of judicial time of this country
and the same may be utilized by the National legal Services
Authority to fund poor litigants to pursue their claims
before this Court in deserving cases."
D. PLEADINGS AND EVIDENCE
43. The point before me is not the merits or demerits of any of
either of these Suits filed by the Ruias. It is not even a question on
merits or demerits of the present suit. The only question I am called
on to answer is whether the reliefs "q" to "u" in the present suit are
within time. This will turn necessarily on an assessment of the
relevant portions of the Limitation Act and as assessment of the
correct starting point of limitation.
44. Before I proceed to this, however, there are two portions of
the present plaint to which reference must be made. The first is
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paragraph 5. The amendments in paragraph 5 are shown in square
brackets and italicized in the following extract.
"5. The present suit has been necessitated, inter alia, on
account of a purported reversion or transfer of the suit
shares, being 75001 shares in the said Company by
Defendant No. 10 to Defendant Nos. 2 to 9 in or about
December 2002. [As on 5th December 2002, Defendant No.
10 has no subsisting right/title over the suit shares as by then
Defendant No. 10 had transferred the suit shares to the
Plaintiff company and had expressly recognized themselves as
trustee of the Plaintiff Company. Hence, the purported
reversion/sale/transfer of the suit shares do not confer any valid
right or title on Defendant No. 2 to 9 and Defendant No. 2 to 9
cannot continue to exercise rights emanating from such shares].
As is more particularly stated hereafter, sometime in or
about August 1998, Defendant Nos. 2 to 9 who where the
holders of 45001 shares in the said Company, transferred
the said shares to Defendant No. 10 for a consideration
equivalent to Rs. 13.5 crores. Additionally, Defendant No.
10 acquired 30,000 shares in the said Company from he
open market for a consideration of Rs.9 crores and thus
acquired a total of 75001 shares (suit shares) in the said
Company. In order about August 2000 Defendant No. 10
further transferred the entire lot of suit shares (75001
shares) to the Plaintiff for a consideration of 10 million DM
(equivalent to Euro.51,12,918.82) and delivered to the
Plaintiff the original share certificates and duly executed
documents of transfer in respect thereof. The Plaintiff was,
however, unable to lodge the suit shares for transfer with
the said Company on account of extensive disputes
between the parties to this suit culminating in litigation and
the passing of restraint orders which have been referred to
more particularly hereinafter.[Because of such restraint orders
passed in the suits instituted by the Defendant No. 2 to 9, the
plaintiff company could not exercise the rights emanating from
suit shares till 19th April 2016. By the Judgment dated 19th
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Arpil 2016 the Hon'ble Supreme Court has dismissed the suit
No. 2 499 of 1999 and suit No. 509 of 2001 instituted by
Defendant No. 2 to 9 as being without any cause of action and
an abuse of judicial process. The Plaintiff crave leave to refer
and rely upon the documents when produced.] The Plaintiff has
learned that during the pendency of the said disputes before
this Hon'ble Court, Defendant No. 10 has purportedly
transferred and/or 'reverted' the entire lot of suit shares
without the knowledge of he Plaintiff and without
informing this Hon'ble Court whose jurisdiction was
invoked by Defendant Nos. 2 to 9 in two suits pending
before this Hon'ble Court (more particularly mentioned
hereinafter) is illegal, unlawful, fraudulent and amounts to a
nullity. The Plaintiff submits that the Plaintiff is the
beneficial owner in respect of the suit shares, the transfer as
between transferor and transferee, i.e., Defendant No. 10
and the Plaintiff admittedly being complete. The Plaintiff
has paid a consideration of 10 million DM (equivalent of
Euro 51,12,918.82 [which is equivalent to INR 22.5 Crores
consideration was paid on 8th August 2000] for the purchase
of the suit share and is in possession of the original share
certificates along with duly executed transfer deed in
respect thereof. The Plaintiff submits that the Plaintiff is
entitled to exercise all rights of beneficial ownership in
respect of the suit shares and has the right to acquire legal
title thereto. However, Defendant Nos. 2 to 9 and 10 are
unlawfully and wrongfully depriving the Plaintiff of the said
rights, inter alia, by claiming a purported reversion or
transfer of the suit shares by Defendant No. 10 to
Defendant Nos. 2 to 9. This purported reversion which is
stated to have taken place in 5th December 2002 has come
to the Plaintiff's knowledge only in April, 2005. The
Plaintiff is filing the present suit, inter alia, for a declaration
that such a purported transfer or reversion of shares to
Defendant Nos. 2 to 9 is nullity and/or of no legal effect
and that the Plaintiff is entitled to all rights as a beneficial
and legal owner of the suit shares.
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45. The next portion of the plaint that is relevant for my purposes
is paragraph 7(xxxiv) at pages 27 to 29 and this is how it reads:
"(xxxiv) On 26th April 2005, the Plaintiff came across
a corporate announcement made by Defendant No. 1
Company on the Website of the Bombay Stock Exchange
wherein they admitted that as on 30th September 2002, the
suit shares (75001 shares) had been acquired by Defendant
No. 10 but were not transferred to their name in view of
Court Orders restraining such transfer. In a separate
Notice of "Share Holding Pattern" as on 31/12/2002
posted on the said Website, it was also claimed by
Defendant No. 1 that as of 31st December 2002, the 30,000
shares acquired by Defendant No. 10 from public
shareholders could not be transferred in the name of
Defendant No. 10 in view of various Court Orders but the
same had been sold/ transferred to the promoters of the
said Company (Defendant No. 1), and that the said shares
continued to stand in the name of the Original
shareholders. Likewise the Plaintiff learned from the U.S.
Securities and Exchange Commission website that under
an Agreement dated 5th December 2002, Defendant No.
10 had reverted/ transferred/ sold the suit shares to
Defendant Nos. 2 to 9. A copy of the relevant extract from
the U.S. Securities and Exchange Commission website is
annexed and marked as Exhibit- "AA" hereto. The
Plaintiff was shocked to learn of these developments which
were stated to have taken place as far back as December
2002 but were altogether suppressed from the learned
single judge who disposed of the aforementioned Notice of
Motion by a common Order on 26th March 2003. At the
same time, from the website of Bombay Stock Exchange
the Plaintiff also learnt that the Board of Directors of
Defendant No. 1 Company claimed that it had, by a Board
resolution dated 11th March 2005, approved a proposal of
restructuring of the Company whereby two of the major
assets of the said Company, namely the liquid gas
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manufacturing entity and the gaseous oxygen, nitrogen and
acetylene manufacturing and/or marketing entities would
be hived off to two newly incorporated companies by the
name of Bombay Oxygen Gases Ltd and Bombay Oxygen
Acetylene Ltd. It was clear to the Plaintiff that the object of
hiving off these assets of the Defendant No. 10 company
was to reduce the Company to a shell and substantially
deplete/render worthless the suit shares which the
Plaintiff is rightfully entitled to. A copy of the relevant
extract from the website of the Bombay Stock Exchange is
annexed hereto as EXHIBIT "BB' & "CC"."
46. The only pleading as to limitation is in paragraphs 14 and 14A
of the suit. The whole of paragraph 14A was added by amendment.
The amended portions in paragraph 14 are shown in square brackets
and italicized.
"14. No part of the suit is barred by the law of limitation.
The contents of purported reversion of the suit shares in
favour of Defendant Nos. 2 to 9 on 5th December 2002 on
the premise that the earlier transfer in favour of the plaintiff is
void and unenforceable was discovered by the Plaintiff only.
On 14th October 2005 when a copy of the agreement dated 5th
December 2012 was handed over to the plaintiff pursuant to the
Order dated 28th September 2005 passed by this Court and
could not be discovered earlier even with reasonable
diligence. The Plaintiff was unable to apply for registration
of the suit shares in its name at any time prior thereto in
view of the interim orders which restrained not only the
Plaintiff but even prior thereto, the Plaintiff's transferee,
Defendant No. 10 from registering the shares in its name.
Further, the Plaintiff has learned about the purported
Development Agreement in respect of the immoveable
property at Mulund only as late as 4.4.2008 as stated
hereinbefore. The suit is within time.
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14A. The cause of action for filing of the present suit arose for
the first time on 14th October 2005, when pursuant to the
Order dated 28th September 2005, a copy of the Agreement
dated 5th December 2002 was handed over to defendants No. 2
to 9 to the plaintiff and it was upon receipt of the said
Agreement, the plaintiff came to know about the contents
thereof, which gave rise to the filing of the present suit. Cause of
action further arose when the plaintiff on or about April 2008
came to know about the purported development agreement in
respect of the property at Mumbai and thus the suit is within
limitation."
47. The parties went to trial on the preliminary issue on this
basis. The Plaintiff's led evidence of one Mr KK Dhar. He filed an
Affidavit of Evidence dated 10th October 2016. He is one of Messer
Holdings' Directors. He then sets out what suit is for. He sets out
some history of the litigation, broadly in accordance with what I
have said about. In paragraphs 10 and 11 of his Affidavit of Evidence
this is what he says:
"10. I say and affirm that the original share certificates in
respect of the suit shares were handed over by Defendant
No. 10 vide its letter dated 20th May 2000 to the Plaintiff
along with the requisite transfer documents and a Power of
Attorney giving the Plaintiff the authority to have the
transfer effected in its name in the register of members of
the said Company. At Serial No. 12 along with the
compilation of documents the letter dated 20th May 2000
is produced. The same be taken on record and marked as
Exhibit.
11. I say and submit that in or about August 2000, the
Plaintiff paid DM 10 million, equivalent to Euro
51,12,918.82 approximately to Defendant No. 10 as
consideration for purchase of the suit shares. A copy of the
letter dated 8th August 2000 by the Defendant No. 10 to
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the Plaintiff confirming receipt of DM 1,00,00,000/-,
equivalent to Euro 51,12,918.82 from the Plaintiff as
consideration for 75,001 shares of Bombay Oxygen
Corporation Ltd. At Serial No. 13 along with the
compilation of documents the letter dated 8th August 2000
is produced. The same be taken on record and marked as
Exhibit. The plaintiff company secured valid and absolute
title over the said 75001 shares of defendant No. 1 company
and consequently plaintiff became the beneficial and legal
owner of such shares. After conveying the suit shares to the
plaintiff Company defendant No. 11 had no title, right or
interest over the suit shares."
48. He then goes on to narrate the history of this litigation. In
paragraph 20, he says only this:
"20. I say that Plaintiff Company came across a
declaration made by Griesham on the website of U.S.
Security Exchange Commission that during the year 2000
Griesham reverted transferred the said 75001 shares to
Ruias."
49. I note that he does not make any mention of the information
on the Bombay Stock Exchange website although there is a reference
to that in the plaint as quoted above. There then follows a recitation
of the various Court proceedings up to the dismissal of the Special
Leave Petitions in 2016.
50. Mr Dhar was cross-examined in Court before me. Right at the
beginning he was asked how much of his Affidavit is true to his own
knowledge and what portions was based on record. I allowed him to
make markings on the original. Paragraphs 1, 3, 4, 6 to 8, 10 to 13, 16,
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22, 24, 25 and 28 were the ones the witness ticked as being to his
knowledge.
51. In answer to Questions 9 to 11 he claimed that Messer
Holdings became the legal and beneficial owner of the suit shares
because he had seen Transfer Certificates and because he claimed
that the original share scrips and the Transfer Deeds with Messer
Holdings. He saw this because, according to him, he was at the
office of Morgan Trade & Commerce Limited on the day when
these shares were delivered. In answer to paragraph 12 he confirmed
that he saw these on 20th May 2000. He was not however aware
whether these shares were ever lodged with Bombay Oxygen. He
did however say that he was present when Griesheim offered to
settle its disputes with Goyal Gases without infringing Clause 6.1 of
the SPA. This offer of Settlement, according to Mr Dhar, in answer
to Question 20 was in late-1999 or early-2000. Present at this
meeting, amongst others, were Mr Suresh Goyal of Goyal Gases and
others. All these negotiations took place at the offices in New Delhi
of Morgan Trade & Commerce Limited and which are apparently
also the registered office of the Goyal Gases. The cross-examination
continued on 19th January 2017 (it began the previous day on 18th
January 2017). On that day he said that he used to represent one
Beach Side Limited and that this limited company was a Director of
Messer Holdings. He served on Messer Holdings' Board as a
representative of Beach Side Limited but he himself was not party to
any decision between Griesheim and Goyal Gases of 1999 or 2000.
That, he said in answer to Question 32, was a brief understanding
that was arrived at before Messer Holdings was even incorporated.
Mr Dhar did only secretarial work for Messer Holdings on behalf of
Morgan Trade & Commerce Limited. Till that date Affidavits were
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made on behalf of Messer Holdings by one Mr HS Rao and one Mr
Madhukar. Mr Dhar himself approved the draft plaint and its
amendments. Most importantly in answer to Question 57 he said
that he himself did not see the declaration on the SEC website;
Madhukar did, and told him about it. The Plaintiff never led the
evidence of Madhukar. Indeed Mr Dhar says that he is not familiar
with the SEC website (Question 58). He has also not personally
seen the Bombay Stock Exchange website referred to in paragraph
7(xxxiv) of the plaint. Mr Dhar also spoke of a corporate
announcement that Messer Holdings made on 26th April 2005. He
could not however mention the date of the corporate
announcement, nor the date of the SEC declaration. He had also no
knowledge whether these websites of SEC and Bombay Stock
Exchange were seen by anybody at the Plaintiff before 2005. He
himself did not ask any person to check this. He said he was only
informed by Madhukar about these websites (Question 66). He was
also shown an Affidavit dated 17th March 2003 made by one Mr Ajit
Shukla. He could not recollect it. He also had no recollection of an
Affidavit made on 11th April 2002 by Mr Rao. I will come to both of
these momentarily. This is the sum and substance of the evidence
before me.
E. RIVAL SUBMISSIONS AND FINDINGS
52. Mr Sreegesh's first submission is that applicable Article in the
Limitation Act 1963 is Article 59:
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"PART IV--SUITS RELATING TO DECREES AND
INSTRUMENTS
Description of suit Period of Time from which period
Limitation begins to run
59. To cancel or set aside an Three years When the facts entitling
instrument or decree or the plaintiff to have the
for the rescission of a instrument or decree
contract. cancelled or set aside or
the contract rescinded
first become known to
him."
53. Mr Sreegesh describes this as a 'compulsory' cause of action
that requires the institution of the suit. That compulsory cause of
action is the Settlement Agreement of 5th December 2002, one that
was disclosed only on 14th October 2005. Till then, he submits,
Messer Holdings had no cause of action at all. It is only when this
document surfaced, he submits, that Messer Holdings
"apprehended" that the said Settlement Agreement between
Defendant No. 10 and Defendants Nos. 2 to 9 if left outstanding
would emerge as an insurmountable obstacle to the Plaintiffs' right
over the suit shares "including its right to lodge the said certificate
for registration notwithstanding that the physical share certificates
and duly filled transfer forms continue to remain with the Plaintiff".
This was information it obtained only on 14th October 2015.
According to him, the Ruias' first suit No. 2499 of 1999 in this
Court only sought enforcement of Clause 6.1 of the SPA and, in an
interim proceedings, Notice of Motion No. 1804 of 1999, sought to
restrain Griesheim and Goyal Gases from breaching this clause. He
submits that the transfer of shares as between Griesheim and
Messer Holdings was complete once the share certificates with their
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duly filled in transfer forms were handed over to the transferee.3 On
that lodgement of the shares and transfer forms Messer Holdings
became the equitable owner of all these 75,001 shares. There was,
therefore, no clear threat to title to these shares. He also says that
the consent ICC arbitral Award was entirely in favour of Messer
Holdings in respect of these 75,001 shares. In his fashioning of the
case, the Ruias' submission that the initial transfer of Bombay
Oxygen's shares to Griesheim was vitiated by misrepresentation was
wholly irrelevant as was the Ruias' contention that this transfer
violated applicable SEBI Regulations. In any case, it was not until
26th April 2005 that Messer Holdings learnt from the US SEC and
the Indian BSE Websites of Griesheim having assigned its rights in
these shares to Ruia family members. None of this, says Mr
Sreegesh, is of consequence. It does not even matter that Dhar has
not been able to prove the statements about the SEC website and
BSE website filing or noting, or that this is clearly excluded by the
rule against hearsay -- Dhar cannot possibly depose to the
correctness of what he was told but only, at best, to what he was
told. He admits, as we have seen, that he himself never once saw
either of these websites and never verified their contents. He was
only told of these contents by Madhukar. None of this, says Mr
Sreegesh, is of the slightest importance. It is only once the
Settlement Agreement was disclosed that Messer Holdings realized
that if left unchecked, that Messer Holdings would implead Messer
Holdings' entitlement to allow the shares for registration. The
substantive relief in the suit is to set aside the Settlement
Agreement. The declaration sought are not even strictly speaking
3 Vasudev Ramchandra Shelat v Pranlal Jayanand Thakar & Ors, AIR 1974
SC 1728; KN Narayanan & Anr v Income Tax Officer, C-Ward & Anr,
(1984) 55 Comp Cas 182 (Ker).
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necessary. In his view, therefore, the suit falls within Article 59 and
is brought within time.
54. As we shall see, Mr Sreegesh is entirely wrong in his
submission that there must be an actual infringement for a right to
sue to accrue, and that a direct, clear and unequivocal threat to title
does not furnish any cause of action. The authorities cited by Mr
Sreegesh himself do not support so overbroad a proposition.
55. In the alternative he submits that if the suit does not fall
under Article 59 then it must be seen not as a suit for declaration
simpliciter. It must still be seen as a composite suit and that brings it
within the fold of Article 113 of the Limitation Act 1963:
"PART X -- SUITS FOR WHICH THERE IS NO PRESCRIBED
PERIOD
Description of suit Period of Time from which
Limitation period begins to run
113. Any suit for which no period Three years When the right to
of limitation is provided sue accrues."
elsewhere in this Schedule.
56. He cites much authority in support of his proposition that4 if
seen like this, the cause of action arose only as recently as on 22nd
January 2007 when the Ruias filed Chamber Summons No. 1579 of
2007 in their first suit No. 2499 of 1999 seeking delivery of the
75,001 shares from Messer Holdings and Goyal Gases.
4 Gouranga Sahu & Ors v Bhaga Sahu & Anr, AIR 1976 Ori 43 (para7);
National Sports Club of India & Ors v Nandlal Dwarkadas Chhabria &
Ors, 1997 (30) Bom.C.R. 565 (para 25); Gunwantbhai Mulchand Shah &
Ors v Anton Elis Farel & Ors, AIR 2006 SC 1556 (para 13); and Union of
India v West Coast Paper Mills Ltd & Anr, AIR 2004 SC 1596 (para 20).
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57. He then submits that even otherwise the suit is within time if
only because the declaration is what he describes as a "offshoot" of
the Settlement Agreement dated 5th December 2002. Up to the
time of disclosure of the Settlement Agreement dated 14th October
2005 all that Messer Holdings had to controvert was a mere denial
of a right, not an infringement of its right. Till 2007, none sought
physical recovery of shares.
58. He next submits that the suit is actually one for fraud and for
this reason, Section 17 of the Limitation Act 1963 will apply:
"17. Effect of fraud or mistake.-- (1) Where, in the
case of any suit or application for which a period of
limitation is prescribed by this Act,--
(a) the suit or application is based upon the fraud
of the defendant or respondent or his agent; or
(b) the knowledge of the right or title on which a
suit or application is founded is concealed by the
fraud of any such person as aforesaid; or
(c) the suit or application is for relief from the
consequences of a mistake; or
(d) where any document necessary to establish
the right of the plaintiff or applicant has been
fraudulently concealed from him,
the period of limitation shall not begin to run until plaintiff
or applicant has discovered the fraud or the mistake or
could, with reasonable diligence, have discovered it; or in
the case of a concealed document, until the plaintiff or the
applicant first had the means of producing the concealed
document or compelling its production:
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Provided that nothing in this section shall enable any
suit to be instituted or application to be made to recover or
enforce any charge against, or set aside any transaction
affecting, any property which--
(i) in the case of fraud, has been purchased for
valuable consideration by a person who was not a
party to the fraud and did not at the time of the
purchase know, or have reason to believe, that any
fraud had been committed, or
(ii) in the case of mistake, has been purchased for
valuable consideration subsequently to the
transaction in which the mistake was made, by a
person who did not know, or have reason to believe,
that the mistake had been made, or
(iii) in the case of a concealed document, has been
purchased for valuable consideration by a person
who was not a party to the concealment and, did not
at the time of purchase know, or have reason to
believe, that the document had been concealed.
(2) Where a judgment-debtor has, by fraud or force,
prevented the execution of a decree or order within the
period of limitation, the court may, on the application of the
judgment-creditor made after the expiry of the said period
extend the period for execution of the decree or order:
Provided that such application is made within one
year from the date of the discovery of the fraud or the
cessation of force, as the case may be."
59. He submits that the knowledge of the fraud must be
knowledge of the date of the Settlement Agreement of 5th
December 2002. This date is 14th October 2005 and hence the suit
is within time.
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60. I have understood these submissions to mean that despite
knowledge of the two previous Suits by the Ruias, Messer Holdings
was no obligation to bring the suit because the Ruias did not seek
delivery of the shares in specie, and, second, because the first suit
No. 2499 of 1999 was nothing but a bare denial of Messer Holdings'
or its predecessor's rights. It furnished no cause of action. The only
cause of action lies in the Settlement Agreement itself and it is only
this document that impedes Messer Holdings' rights. He also says
that though not a party to the Settlement Agreement, Messer
Holdings is entitled in law to have it 'rescinded' and 'delivered up
for cancellation'.
61. Mr Kapadia contests all these submissions and propositions.
He urges me to look at the frame of the suit and says it is not
possible to segregate the prayers for convenience as the Plaintiffs
now seek to do. Messer Holdings is a stranger to the 2002
Settlement Agreement. It is an outsider to it. It, therefore, must
have a declaration first of its ownership and entitlement to the
shares. Without that declaration none of the other prayers can
possibly follow.
62. Mr Kapadia says that the right to sue first arose when Messer
Holdings' alleged beneficial right was challenged. This happened in
two ways. First, by an independent assertion with no reference to
Messer Holdings at the time when Ruias filed their first suit No.
2499 of 1999 on 20th April 1999. The second challenge arose when
Messer Holdings was named, and this happened twice. The first
was in August 2000 when the Ruias sought to implead Messer
Holdings as Defendants to their first suit No. 2499 of 1999. The
second when the Ruias filed their second suit No. 509 of 2001 on
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5th February 2001 to which Messer Holdings was a party. This
sought to rescind the SPA of 23rd January 1997 between Griesheim
and the Ruias; and Griesheim was the source of Messer Holdings'
title to the suit shares. Messer Holdings claims to have acquired
beneficial rights in the shares when it received the share scrips and
duly filled transfer forms. This was on 20th May 2000. According to
Messer Holdings it is from this date that it had rights in these
shares. Ruias' impleadment of Messer Holdings both by way of
Chamber Summons in the first suit and by filing of the second suit
followed shortly thereafter. Therefore, Messer Holdings so-called
beneficial right in the suit shares came to be challenged by the Ruias
in August 2000 when the Ruias filed a Chamber Summons to
implead Messer Holdings, or in February 2001 when it filed the
second suit.
63. I believe Mr Kapadia is correct and there is a fundamental
aspect that Mr Sreegesh did not address: there was no reason for
Messer Holdings to be joined as a party defendant to either of the
Ruias suits except for a direct and overt threat and challenge by the
Ruias to Messer Holdings' beneficial rights in the suit shares. I have
already set out the prayers in suit No. 2499 of 1999 after the relevant
amendments. These show that Messer Holdings knew of that
substantive challenge to their rights.
64. Messer Holdings also appeared in the second suit against the
Ruias in respect of the shares. It appeared before the learned Single
Judge and applied for a disclosure of the Settlement Agreement.
This was in an Affidavit dated 17th March 2003 filed by one Mr Ajit
Shukla on behalf of Messer Holdings in suit no. 2499 of 1999. This
Affidavit is at pages 100-101 of the compilation. This shows that
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Messer Holdings knew of the Agreement between Griesheim and
the Ruias as early as 2003 (not October 2005 or April 2005). They
may not have known terms of that Agreement but they certainly
knew of it. Dhar claiming ignorance of this Affidavit is of no avail to
the Messer Holdings.
65. At the time when Messer Holdings applied in the Ruias
second suit No. 509 of 2001 for relief in respect of the shares, the
response by the Ruias on Affidavit was to say that Messer Holdings
had to file its own suit if it claim any rights to the shares.
66. I believe Mr Kapadia is right when he says that the test for the
date of knowledge has to be the knowledge of the infringement or
the overt threat to the right or the title.
67. In the evidence and in the pleadings, Messer Holdings
contends that it did not know of the SEC filings or of the BSE filings
till 2005. This is demonstrably incorrect. The annexures to the
present suit show that this is not so. A copy of the SEC filings is at
pages 265-268. The relevant item is Item 7 at page 266. It
specifically references the suit shares, the 2002 reversion and the
fact that this reversion is between Griesheim and members of Ruia
family. The Stock Exchange filing is of the September 2002 quarter.
The filing is set out at pages 269-271 of the present suit. The
relevant portion is set out at pages 269-270. The entry at page 270
shows that the 30,000 shares acquired by Griesheim from public
stand in the name of the original shareholders.
68. The evidence of Dhar on this is entirely unconvincing. He
claims to have known nothing of this till he was told about these
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filings by Madhukar, whose evidence was not led. We do not know
why. This is surely no basis on which to proceed on a mixed
question of fact and law. The plaint says that the 2002 filings were
ones that Messer Holdings saw on 26th April 2005. There is
nothing at all to support this. There is nothing to explain why from
2002 to 2005 with all these litigations at various stages Messer
Holdings did not check these filings. In 2003 Messer Holdings filed
Appeal No. 855 of 2003 and demanded disclosure of the Settlement
Agreement. Therefore it knew of the Settlement Agreement on that
day, and it knew that the settlement was between Griesheim and the
Ruias. That settlement could pertain to one thing only -- the 75001
suit shares, and therefore Messer Holdings knew of the
infringement by both the Ruias and Griesheim (its own parent) of
Messer Holdings' alleged title.
69. The right to sue, says Mr Kapadia, and I think quite correctly,
arises on an overt, clear and unambiguous challenge or threat. The
filing of a suit threatening one's title to the property is nothing if not
overt. It is difficult to conceive of anything more overt than this in a
civil claim. Section 9 of the Limitation Act 1963 clearly says that
once time has begun to run, no subsequent disability or inability to
institute a suit stops it. Time began to run from the date of Messer
Holdings' knowledge of an overt challenge to its title and this was in
August 2000 or February 2001 and no later. I also believe Mr
Kapadia is correct in saying that this is a suit that falls within the
meaning of Article 58, which speaks of suits for a declaration and
provides for three years from the date when the right to sue first
accrues. The difference between Article 58 and Article 113 is that
the former speaks of time running from the date when the right to
sue first accrues, i.e., from no later date. Mr Kapadia is also correct
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in saying that limitation ceases running only in two situations: on the
filing of a suit, or on the grant of an anti-suit injunction. Equitable
considerations are irrelevant.5 The Ruias' suits did not operate to
bar a substantive suit for declaration of title (such as the present
one) even without a disclosure of the settlement agreement.6 An
assertion by the Ruias that they were entitled to the 45,001 shares
and protection in respect of all 75,001 shares, and this with notice to
Messer Holdings was surely sufficient to start time running.7
70. I find Mr Kapadia's reliance on the decision of Wadsworth J
in Vellayya Konar & Anr v Ramaswami Konar & Anr8 to be
particularly apposite on the question of the frame of the suit and
when limitation would start running:
The judgments of both the Courts below seem to me to
have proceeded on a misunderstanding of the cases quoted,
one case in particular being quoted under one reference as
supporting the plaintiff and the same case under another
reference as supporting the contesting defendants and both
the learned Judges seem not to have grasped the
difference between a suit for the cancellation of an
instrument and a suit for a declaration that the
instrument is not binding upon the plaintiff. Leaving
aside for the moment the complication due to the fact that
the plaintiff in this suit sues in a representative capacity, the
distinction between the two classes of suits seems to me to
be well established by the decisions. When the plaintiff
seeks to establish a title in himself and cannot establish
5 Siraj-ul-Haq Khan & Ors v The Sunni Central Board of Wakf UP & Ors,
AIR 1959 SC 198.
6 Somshikharswami Shidlingswami v Shivappa Mallappa Hosmani & Ors,
Air 1924 Bom 39.
7 JV Gokal Charity Trust v Contrex Pvt Ltd, 2016 SCC Online Bom 8004
8 AIR 1939 Mad 844.
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that title without removing an insuperable obstruction
such as a decree to which he has been a party or a deed
to which he has been a party, then quite clearly he must
get that decree or deed cancelled or declared void in toto
and his suit is in substance a suit for the cancellation of
the decree or deed even though it be framed as a suit for
a declaration. But when he is seeking to establish a title
and finds himself threatened by a decree or a transaction
between third parties, he is not in a position to get that
decree or that deed cancelled in toto. That is a thing
which can only be done by parties to the decree or deed
or their representatives. His proper remedy therefore,
in order to clear the way with a view to establish his title
is to get a declaration that the decree or deed is invalid
so far as he himself is concerned and he must therefore
sue for a declaration and not for the cancellation of the
decree or deed. ... My attention has not been drawn to any
decision which throws any real doubt on the general
proposition that when a person seeks to establish title
which cannot be established without removing a decree or
an instrument to which he is himself a party, then whatever
be the garb in which he dresses his suit, its substantial
character must be a suit for the cancellation of the decree or
instrument; but if the establishment of his title is being
impeded by the effect of a transaction between other
parties, he cannot legitimately ask for the cancellation of
that transaction but can only ask for a declaration that
so far as he is concerned, it is not binding.
71. This is precisely the case here. Messer Holdings is a stranger
to the Settlement Agreement. It is of no consequence to Messer
Holdings whether that document is cancelled or not; it must get a
declaration that it is not bound by that document (to which it is not a
party). The case cannot, therefore, fall under Article 59 at all. The
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decision by Wadsworth J is not only one with which I am in most
respectful agreement, but it has also been followed since.9
72. Thus, Article 59, Mr Kapadia says, and again I think rightly,
has no application at all to such a case. A stranger to an instrument
or contract is unaffected by it. He may at best sue to say that it is not
binding on him; but to have an instrument such as the Settlement
Agreement declared void or voidable under Section 31 of the
Specific Relief Act 1963 or to rescind the contract, the plaintiff must
be a party to that contract. He cannot be a stranger to it. Mr
Sreegesh's reliance on the Supreme Court decision in Md Noorul
Hoda v Bibi Raifunnisa & Ors10 is entirely misplaced. The question
that is before me today did not arise there. The Supreme Court said
in terms that Article 59 applies in a case to set aside a contract,
instrument or decree between parties inter se. In the present case,
Messer Holdings' claim is not dependent on setting aside a written
contract. Let us suppose for a moment, there was no written
settlement contract at all, and that Griesheim and the Ruias had an
undocumented oral understanding of indeterminate date. Messer
Holdings would still have had to bring suit to eliminate the Ruias'
claim as brought in their two suits; for those two suits presented the
clearest and most unequivocal threat to Messer Holdings' claim to
those very shares. The declaration, therefore, sought by Messer
Holdings has nothing at all to do with the Settlement Agreement but
only to do with the Ruias' direct claim to the 75,001 shares and their
open threat of Messer Holdings' rival claim. For these reasons, Mr
9 Ponnnammal & Ors v Kanthammal & Ors, AIR 1952 Mad 552, 553: "it is
logically impossible for a person who is not a party to a document or to a
decree to ask for its cancellation."; Sukh Lal & Ors v Devi Lal & Ors,
AIR 1954 Raj 170 (Wanchoo CJ and Modi J)
10 (1996) 7 SCC 767.
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Sreegesh's reliance on other decisions do not assist him.11 Prem Raj v
DLF Housing & Construction Pvt Ltd & Anr12 is of no conceivable
application to the present case. The question there was of whether a
party to a contract could sue for specific performance and, in the
alternative, for rescission. The Supreme Court held it could, but the
converse was not true. This has nothing at all to do with our
situation where such a relief is sought by a stranger to the contract.
73. Returning to the plaint, I do not see how Messer Holdings
can maintain the argument that the declaration it seeks are based on
a cause of action that did not arise till 2005. Messer Holdings
needed this declaration in August 2000 or at the latest in February
2001. To this, the Supreme Court's subsequent holding of the
Ruias' suits to be without a cause of action and perhaps even an
abuse of process of the Court is not an answer; it cannot be. The
Supreme Court clearly said Messer Holdings would have to
establish its case in its own suit and all defences were left open.
What matters is not the tenability or the chance of success of an
overt challenge, but the date when that overt challenge is made.
When it comes to limitation we do not look to the quality of the
challenge. We look to see when that challenge was mounted.
74. It is not Article 113 or Article 59 that will apply to a suit like
this. It is only Article 58. This suit should have been filed within
11 Bai Asmalbai w/o Vora Mahamad Alli v Esmailji Abdulali & Ors, AIR 1964
Guj 174; Muppudathi Pillai v Krishnaswami Pillai & Ors, AIR 1976 Mad
1. Neither dealt with a case like this one and, in any case, Muppudathi
could not have held contrary to Vellaya Konar or Ponnammal, both of
which were binding had the issue arisen, and neither of which were
cited.
12 AIR 1968 SC 1355.
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three years of the earlier of the two dates -- 24th August 2000 or
5th February 2001.13
75. I find the submissions from Mr Sreegesh based on Mt Bolo V
Koklan & Ors,14 Mt Rukhamabai v Lal Laxmi Narayan15 and
Mohammad Yunus v Syed Unissa & Ors16 all to be against Messer
Holdings. Mt Bolo, for instance, clearly says that the right to sue
accrues on an infringement of the right claimed in the suit, or at least
a clear and unequivocal threat to infringe that right by the defendant.
The Ruias' suits were all that and more. They were the clearest and
most unequivocal threat of an infringement of Messer Holdings'
right to the shares. That is nothing but a test of 'clear and present
danger', and it was made in 2000 and 2001, not only or for the first
time when the Settlement Agreement was disclosed. This is not a
case of mere denial of a right. For instance, if a party was to merely
say that he owns a certain property, the true owner is perhaps not
required to bring suit. But where a challenger files a suit against the
alleged true owner and threatens his title, or otherwise acts
affirmatively on his claim and mounts a clear and unequivocal threat
to the other's title to that property, the true owner must of necessity
bring suit. This is not a mere denial or an assertion. It is an overt
threat because the challenger in such a case is seeking rights in
respect of the very property in question. Mst Rukhmabai related to
relinquishment deeds, trusts and whether the suit property was of a
13 I will take the date of 24th August 2000 to be somewhat approximate.
That was the date when Ruias filed a Chamber Summons seeking
impleadment of Messer Holdings. Possibly the date of service on
Messer Holdings was slightly later.
14 AIR 1930 PC 270.
15 AIR 1960 SC 335.
16 AIR 1961 SC 808.
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joint family or built by acquisitions of the creator of a trust. In any
case, the Supreme Court there reiterated what the Privy Council
said in Mt Bolo. This is, therefore, also against Messer Holdings.
Mohammed Yunus reaffirms this position.
76. None of the other authorities cited by Mr Sreegesh are shown
to be of relevance to the limited issue at hand.17
77. In this view of the matter, I must conclude that prayer (q), (r),
(s), (t) and (u) of the suit are completely barred by limitation.
78. The suit will continue for the remaining prayers, viz., prayers
(v), (w), (x) and (z). It is however another matter whether the
Plaintiffs can maintain the remaining prayers without being able to
obtain a declaration in terms of prayer (q) and (s) and a decree in
terms of prayer clauses (r), (t) and (u). After all, their rights in
relation to the 2008 Development Agreement that is the subject
matter of prayers (v) and (w) and the mortgage deed mentioned in
prayer clauses (x) and (y) are entirely dependent on a declaration of
Messer Holdings being the owner and having beneficial interest in
the suit shares in the first place. If not, it is an outsider to Bombay
Oxygen. However, this is not a matter that I am required to consider
in the present preliminary issue under Section 9A. All contentions
must be left open in that regard, and they are.
79. The preliminary issue is disposed of in these terms.
17 Vittal Daulat Lad v Ashok Govind Tawade, 2002 (3) Bom CR 475;
Ambalal Ranchhoddas & Anr V Shamjibhai Ladhabhai Patel & Anr, (1969)
10 GLR 197; Bharat Singh v Kunwar Singh & Anr, AIR 1991 MP 368;
Kuttapan Achari v State of Kerala, 2005 (1) KLT 273;
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80. Even after holding that the prayers (q) to (v) as time barred,
the present suit have to be numbered as a Commercial suit. Registry
is directed to have that done. All the requirements of the
Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Act 2015 will apply. Ordinarily,
this would mean the application of the amended provisions of
Sections 35 and 35A of the CPC (as amended by the Commercial
Courts Act) and that, in turn, would mean that costs must follow the
event. The proviso inserted by the amendment requires me to give
reasons for not imposing costs. The only reason I can conceive, and
it will have to do, for not imposing costs is the length of this
litigation and, second, it seems to me that the central player in all
this is Griesheim, one of Messer Holdings' parents. As we have
seen, Griesheim contracted with the Ruias. It did so after its
contract with Goyal Gases. It then set up Messer Holdings as an
overseas subsidiary. It was Griesheim that took the Bombay Oxygen
shares from the Ruias and the public. It was Griesheim that sought
to vest these in its child, Messer Holdings, and it is Griesheim that
now contests its own offspring's case and asserts a reversion of
these shares to the Ruias. That is enough said now to not award
costs against Messer Holdings.
(G. S. PATEL, J.)
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