Bombay High Court
Ramesh Sumermal Shah vs Bharat Kishoremal Shah on 8 May, 2024
Author: R.I. Chagla
Bench: R.I. Chagla
2024:BHC-OS:7542
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Kavita S.J.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO.10500 OF 2023
Ramesh Sumermal Shah & Ors., ...Petitioners
Versus
Bharat Kishoremal Shah & Ors., ...Respondents
WITH
INTERIM APPLICATION (L) NO.13398 OF 2023
IN
COMMERCIAL ARBITRATION PETITION (L) NO.10500 OF 2023
Ramesh Sumermal Shah & Ors., ...Applicants/
Petitioners
Versus
Bharat Kishoremal Shah & Ors., ...Respondents
----------
Mr. Sharan Jagtiani, Senior Counsel a/w Ankit Lohia, Counsel a/w
Mr. Rahul Sarda, Counsel a/w Mr. Varun Nathani, Counsel a/w Mr.
Chirag Sarawagi and Ms. Riya Thakkar i/b Tushar Goradia for the
Petitioners.
Mr. Ashish Kamat, Senior Counsel a/w Mr. Rohan Savant, Mr. Ishwar
Nankani and Mr. Huzefa Khokhawala, Mr. Aryaman Ghag i/b M/s
Nankani and Associates for the Respondent Nos.1 and 2.
----------
KAVITA
SUSHIL CORAM : R.I. CHAGLA, J.
JADHAV
Digitally signed
by KAVITA
SUSHIL JADHAV DATED : 8TH MAY, 2024.
Date: 2024.05.08
12:31:39 +0530
1
::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 :::
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
ORDER :
1. By the Interim Application (L) No.13398 of 2023, the
Applicants/Original Petitioners are seeking a stay on the effect,
implementation and enforcement of the impugned Interim Award
dated 15th December, 2022 duly corrected by Order dated 23 rd
December, 2022 passed by the Arbitral Tribunal.
2. By the above Commercial Arbitration Petition, in which
the present Interim Application has been filed, the challenge is to the
Interim Award dated 15th December, 2022 as corrected ("impugned
Interim Award") by which the Arbitral Tribunal has granted the
Money Decree of Rs.42.65 Crores against the Petitioners and in
favour of Respondent Nos. 1 and 2. The Petitioners have sought an
unconditional stay on the impugned Interim Award.
3. The facts briefly stated are as under:
The Sumer Group constituted 3 branches - Ramesh Shah
Group which are the Petitioners, Bharat Shah Group which are the
Respondent Nos. 1 and 2 and the Lookar Group which are the
Respondent Nos. 3 and 4. The dispute between the parties to the
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
arbitral proceedings emanates under a Memorandum of
Understanding ("MOU") dated 25th September, 2014 and
Supplemental Memorandum of Understanding ("SMOU") dated 8th
December 2015 under which the parties agreed to a division of
various entities / assets forming part of the Sumer Group.
4. Disputes and differences arose between the parties in
compliance of obligations under the MOU and SMOU. Each party
accused the other of not complying with its obligations under the
MOU and SMOU. The Petitioners alleged that the Respondent Nos. 1
and 2 and Respondent Nos. 3 and 4 breached their obligations under
the MOU and SMOU. Similar allegations were raised by the
Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4.
5. The Respondent Nos. 3 and 4 filed a Section 9 Petition
against the Petitioners relying upon the Partnership Deeds, whereas
the Respondent Nos. 1 and 2 filed Suit No.319 of 2020. During these
proceedings, the parties consented to refer their disputes under the
MOU and SMOU to an Arbitral Tribunal.
6. By an Order dated 8th April, 2021, this Court constituted
the Arbitral Tribunal.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
7. On 16th August 2021, the Respondent Nos. 1 and 2 filed
their Statement of Claim for specific performance. Similarly, the
Respondent Nos. 3 and 4 filed their Statement of Claim seeking
specific performance.
8. In October 2021, the Petitioners filed their Statement of
Defence. The Petitioners in their Statement of Defence to the claim
filed by the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4
respectively, specifically pleaded that the respective Respondents had
breached their obligations under the MOU and SMOU. The
Petitioners in addition, had also filed a Counter Claim.
9. The Respondent Nos. 1 and 2 and Respondent Nos. 3
and 4 obtained interim Orders dated 21 st January, 2022 and 20th
June, 2022 on the contention that they continued to remain partners
in Sumer Builders and Sumer Corporation. By the interim orders,
injunction was granted in respect of properties of the Petitioners'
Group which injunction continues till today.
10. On 17th December, 2021, the Respondent Nos. 1 and 2
filed an Application under Section 31(6) of the Arbitration and
Conciliation Act, 1996 ("the Arbitration Act") seeking a Decree on
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
admission under Order XII Rule 6 of the Civil Procedure Code, 1908
("CPC") alleging that the Petitioners have admitted their liability to
pay the balance sum of Rs.42.65 Crores. The Petitioners have in
response to the Application categorically denied their liability to pay
any amount to the Respondent Nos. 1 and 2 inter alia on account of
breaches committed by Respondent Nos. 1 and 2 and its lack of
readiness and willingness.
11. By the impugned Interim Award, the Arbitral Tribunal
granted Money Decree of Rs.42.65 Crores against the Petitioners and
in favour of Respondent Nos. 1 and 2.
12. The present Commercial Arbitration Petition was filed on
12th April, 2023 and the present Interim Application taken out by the
Petitioners therein on the said date.
13. Mr. Sharan Jagtiani, learned Senior Counsel for the
Petitioners has submitted that the MOU and SMOU set out reciprocal
obligations to be performed by the Respondent Nos. 1 and 2 and
Respondent Nos. 3 and 4 and the Petitioners. He has submitted that
these reciprocal promises included transfer of all right, title, interest
and control over assets and ownership in partnership firms /
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
companies as set out in Annexure A1 to A5 of the MOU as modified
by the SMOU. Further, the taking over of liabilities to the extent of
Rs.1315 Crores by the Petitioners as well as the payment of amounts
by the Petitioners to the Respondent Nos. 1 and 2 and Respondent
Nos. 3 and 4.
14. Mr. Jagtiani has submitted that admittedly, the Sumer
Group was in financial difficulty. It had third party liabilities of
approximately Rs.1300 Crores. The liability along with the monetary
sums payable to the Respondents Nos. 1 and 2 and Respondent Nos.
3 and 4 were to be paid by disposing off assets of the Sumer Group.
He has placed reliance upon Clause 2(a) of the MOU which provides
complete autonomy to the Petitioners to deal with the properties 'as
they may deem fit'. This includes the discretion to use the proceeds
of the said properties to pay the Respondent Nos. 1 and 2. He has
submitted that this understanding was accepted by the Respondent
Nos. 1 and 2 as is evident from their Statement of Claim. In the
Statement of Claim, the pleaded case of the Respondent Nos. 1 and 2
is that the proceeds from the Santacruz property and Mazgaon
property were used to clear liability of the Sumer Group and pay
monetary consideration payable to the Respondent Nos. 1 and 2. He
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
has placed reliance upon Board Resolutions dated 1 st September,
2014 and 6th September, 2014, wherein the Respondent Nos. 1 and 2
have pleaded that "...The proceeds from the sale of units were to be
used towards clearing the liabilities of the Sumer Group and paying
the monetary consideration payable to Bharat Group and Loonkar
Group ."
15. Mr. Jagtiani has submitted that the obligation under the
MOU and SMOU are inextricably linked to each other. The obligation
of the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4
recorded under Clause 2(a) is linked to the obligation of the
Petitioners to pay monies towards the Sumer group liability as well as
towards the Respondent Nos. 1 and 2 and Respondent Nos.3 and 4
respectively. These obligations are not independent of each other.
16. Mr. Jagtiani has submitted that there is a specific
pleading in the Statement of Defence that even prior to the MOU,
there were Board Resolutions of the relevant entity, namely Sumer
Buildcorp Private Ltd, to the effect that the Petitioners were
authorized to negotiate with the Adani Group for grant of
development rights of the Mazgaon property. This is reinforced by
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
the language of the MOU in terms of Clause 2(a) of the MOU which
specifically states that even pending the implementation of the MOU,
the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 will
execute all documents, etc., to facilitate the dealing with such
property so as to enable the Petitioners to raise the necessary finance
required to discharge its obligations under the MOU. None of this has
been altered by the SMOU. In fact, Clause 1 of the SMOU reiterates
the MOU except where expressly varied.
17. Mr. Jagtiani has submitted that it has also been pleaded
in the Statement of Defence that the Respondent Nos. 1 and 2 wrote
letters to the Adani Group and the Petitioners objecting to the grant
of development rights. The Adani Group issued a Public Notice on
20th January, 2021 and after which the Respondent Nos. 1 and 2
forwarded a Letter dated 2nd February, 2021 to the Advocate of Adani
Group objecting to the redevelopment of the Mazgaon property. He
has submitted that the Respondent Nos. 1 and 2 committed breach of
its obligations under the MOU and SMOU and that there was lack of
readiness and willingness on the part of Respondent Nos. 1 and 2. He
has referred to the defence pleaded by the Petitioners in response to
the Statement of Claim as well as the Application under Section
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
31(6) of Respondent Nos. 1 and 2. He has submitted that the Arbitral
Tribunal could not have passed the Interim Award without
considering and deciding the defence raised by the Petitioners.
18. Mr. Jagtiani has submitted that it is a specific pleaded
case of the Petitioners in the Statement of Defence as well as the
Reply Affidavit to the Application under Section 31(6) filed by the
Respondent Nos. 1 and 2 that the Respondent Nos. 1 and 2 breached
their reciprocal obligations under the MOU and SMOU. He has placed
reliance upon Paragraph 17 and 22 of the Statement of Defence of
the Petitioners and Paragraph 36 of the Affidavit-in-Reply to the
Application of Respondent Nos. 1 and 2 under Section 31(6) of the
Arbitration Act.
19. Mr. Jagtiani has submitted that the Respondent Nos. 1
and 2 had not complied with their obligations under the MOU and
SMOU viz. they interfered with the dealings in companies / firms /
properties vested in the Petitioners under the MOU and SMOU.
Further, the pleaded case of Respondent Nos. 1 and 2 and at the time
of filing of the Written Statement to the Counter Claim is that they
continued to remain partners / shareholders / owners in respect of
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Sumer Builders, Sumer Buildcorp Private Limited and Sumer
Corporation (which otherwise vest with the Petitioners) and that the
Petitioners had no authority to deal with these entities / properties.
Further, the Respondent Nos. 1 and 2 failed to transfer their share,
right, interest in Sumer Builders. It is only subsequently that the
Respondent Nos. 1 and 2 retired vide Letter dated 8 th March, 2022
pursuant to an Order dated 8th March, 2022 passed in Commercial
Appeal No.2 of 2022. This is also the case with Sumer Corporation
where the Respondent Nos. 1 and 2 subsequently retired vide Letter
dated 8th March, 2022 pursuant to an Order dated 8th March, 2022
passed in Commercial Appeal No.2 of 2022. In the case of Sumer
Buildcorp Private Limited; Loonkar Developers Private Limited and
Shah & Nahar Development the Respondent Nos. 1 and 2
subsequently transferred their share / right / interest in the said
company vide Consent Interim Award No.6 dated 8 th February 2023.
Further, there has been a failure to transfer the share / right / interest
of the Respondent Nos. 1 and 2 in Sumermal H. Shah Family Trust
(Mahim). There is also a failure to contribute Rs.10 Crores for the
Fixed Deposit of Shree Laxmi Vallabh Parashwanth Trust (Bhinmal)
and failure to contribute Rs.10 Crores for the Fixed Deposit of
Sumermal H Loonkar Charitable Trust (Bhinmal).
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
20. Mr. Jagtiani has submitted that it is the categorical
defence of the Petitioners that the Respondent Nos. 1 and 2
committed breach of their obligations under the MOU and SMOU.
The breach by Respondent Nos. 1 and 2 goes to the root of readiness
and willingness as well as on the question of entitlement of
Respondent Nos. 1 and 2. Such breach shows the lack of readiness
and willingness and disentitles the Respondent Nos. 1 and 2 to
monetary reliefs more so without evidence led by the parties.
21. Mr. Jagtiani has submitted that the Arbitral Tribunal has
noted that the Petitioners have discharged substantial liabilities taken
over by them. He has submitted that the obligation of the Petitioners
to pay amounts of Respondent Nos.1 and 2 under the SMOU is not
unconditional and/or absolute. The MOU and SMOU contain
reciprocal obligations which are dependent upon each other. The
benefits under the MOU and SMOU to be received by the Respondent
Nos. 1 and 2 is dependent upon Respondent Nos. 1 and 2 complying
with their obligations. He has submitted that in the instant case, the
Respondent Nos. 1 and 2 have not been complied with their
obligations and in fact, breached the same.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
22. Mr. Jagtiani has submitted that although the Arbitral
Tribunal in the impugned Interim Award comes to conclusion that
there are alleged admissions to support the grant of a monetary
award. However, when it comes to considering the defence to the
making of this Interim Award, the Arbitral Tribunal in Paragraph 42
of the impugned Interim Award has in the context of the letter
written by Respondent Nos. 1 and 2 to the Adani Group, not
expressed any opinion but prima facie found that it does not appear
that by writing a letter results in proving that the Respondent Nos. 1
and 2 and Respondent Nos. 3 and 4 were not ready and willing to
perform their obligations under MOU and SMOU. Thus, the Arbitral
Tribunal has not wished to adjudicate the question of breach of
obligations by Respondent Nos. 1 and 2 and the question of lack of
readiness and willingness. At the same time, the Arbitral Tribunal
proceeded to express a prima facie opinion. He has submitted that
no award could have been granted on the basis of any prima facie
rejection of defence pleaded by the Petitioners.
23. Mr. Jagtiani has submitted that the Arbitral Tribunal
completely ignored and failed to deal with the most basic defence of
the Petitioners. In the face of this defence, it can never be said that
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
there is an unequivocal admission under principles of Order XII Rule
6 of the CPC to the grant of the monetary award. The Arbitral
Tribunal has only expressed a prima facie view and this does not rule
out the possibility that after evidence is led, the defence will indeed
be established.
24. Mr. Jagtiani has submitted that the Arbitral Tribunal has
failed to deal with the defence and not provided any reasons in
respect of reciprocal obligations. He has submitted that this issue
was also raised during oral submissions, which the Arbitral Tribunal
has overlooked.
25. Mr. Jagtiani has submitted that the Arbitral Tribunal
could never have on a piecemeal basis awarded the monetary
amounts without considering the reciprocal obligations, the breach
thereof by Respondent Nos. 1 and 2 and lack of readiness and
willingness by Respondent Nos. 1 and 2. He has submitted that the
Petitioners have a right to lead evidence which is a fundamental
principle of natural justice more so given the fact that there is no
clear unequivocal admission entitling the Respondent Nos. 1 and 2 to
an Interim Award. He has placed reliance upon the decision of Delhi
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
High Court in Deepak v. Ramesh Sethi 1, wherein the Court has held
that "the right to lead evidence is pivotal to a fair trial and partakes
of the character of natural justice and fair play."
26. Mr. Jagtiani has submitted that even though in arbitral
proceedings strict provisions of Evidence Act, 1872 and CPC, 1908
are not applicable and though the Tribunal is not bound by the
provisions contained therein, the Tribunal is bound to consider the
principles of Evidence Act, 1872 and the CPC, 1908 and has to follow
the principles of natural justice. He has placed reliance upon the
decision of this Court in Rashmi Housing Pvt. Ltd vs Pan India
Infraprojects Pvt. Ltd 2 at Paragraph No.59 in this context.
27. Mr. Jagtiani has submitted that the Arbitral Tribunal has
passed the impugned Award under provisions of Order XII Rule 6 of
the CPC seeking Decree on Admission. It is the case of Respondent
Nos. 1 and 2 that the Petitioners have made admissions in pleadings,
warranting a Decree on Admission. He has submitted that the
Respondent Nos. 1 and 2 have placed a piecemeal reliance on
pleadings wherein the Petitioners admitted the existence and
1 2022 SCC OnLine Del 1321
2 2014 SCC Online Bom 1874
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
execution of the MOU and SMOU. He has submitted that neither in
the Application for Interim Award nor in the Interim Award is there is
a specific categorical admission that any sum of money is due and
payable by the Petitioners to the Respondent Nos. 1 and 2. The kind
of admission which may warrant an Application under Order 12 Rule
6 of the CPC is completely lacking in the present dispute. The
Respondent Nos. 1 and 2 have based their case on three alleged
admissions viz. (i) admission of the existence of the MOU & SMOU
and that the Petitioners are also seeking specific performance of the
MOU & SMOU; (ii) the admission that the parties have acted under
the MOU & SMOU and there has been performance under the MOU &
SMOU and (iii) the admission that this is a family settlement.
28. Mr. Jagtiani has submitted that the Petitioners have
categorically and in unequivocal terms denied any liability
whatsoever to pay Rs.42.65 Crores to the Respondent Nos. 1 and 2. It
is the specific pleaded case of the Petitioners that no amount
whatsoever is payable to the Respondent Nos. 1 and 2. He has placed
reliance upon the Reply Affidavit to the Section 31(6) Application of
the Respondent Nos.1 and 2, wherein the Petitioners have pleaded
that they deny that the amount of Rs.89 Crores is any more payable
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
as alleged or otherwise.
29. Mr. Jagtiani has submitted that the impugned Award
merely proceeds on the existence and execution of the MOU and
SMOU while passing a Decree on Admission for Rs.42.65 Crores. This
has completely disregarded the pleadings filed and the defences
urged by the Petitioners. He has submitted that the admission in
pleading must be read as a whole or not at all. There cannot be a
piecemeal reading of pleading to pass an Interim Award against the
Petitioners. He has in this context placed reliance on the Judgment of
this Court in Western Coalfields Limited v. Swati Industries 3, in
particular Paragraphs 4 and 5 of the said Judgment. He has further
placed reliance upon the Judgment of this Court in Sphere
International v. Ecopack India Paper Cup Private Limited 4. He has
submitted that the decision of the learned Single Judge of this Court
in Sphere International (supra) has been upheld by the Division
Bench of this Court by Judgment dated 14 th March, 2018 in Appeal
No.101 of 2018.
30. Mr. Jagtiani has submitted that the other inconsistency
3 AIR 2003 Bom 369 equivalent to 2003 SCC OnLine Bom 148
4 Judgment dtd .21/12/2017 in Notice of Motion No. 2059 of 2017
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
and patent error in the Interim Award is that when it comes to
dealing with the issue of limitation as has been done in Paragraph 32,
34 and 35, the Tribunal saves the period of limitation for the
monetary claims by referring to the performance and the conduct of
the parties in respect of other aspects of the MOU. If the monetary
claims were looked at on a standalone basis, then under Article 54 of
the Limitation Act, 1963 the defence is that the monies were due on
30th September 2016 and the three-year period of limitation would
expire on 30th September 2019 and the notice invoking arbitration is
after that. The Arbitral Tribunal for the purposes of limitation has
looked at the MOU as one composite whole and the Tribunal relies
upon conduct in performance of the MOU after the date of 2016. The
Tribunal has held that it is the conduct which saves the period of
limitation or extends the period of limitation.
31. Mr. Jagtiani has submitted that inconsistent with this
approach of looking at the MOU as a composite whole is the
approach taken by the Tribunal in considering the merits of the
Interim Award Application for grant of monetary payments. In that
aspect of the matter, the Tribunal in various places says that where an
Application for Interim Award is made and that part of the MOU &
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
SMOU does not require any leading of evidence or disputed
questions, the Tribunal can grant it on a piecemeal basis. It is on that
logic that the Tribunal considers only the payment obligation without
considering the corresponding obligations which constitute the
reciprocal promises / Counter Claim, namely, the attempt on the part
of Respondent Nos. 1 and 2 in undermining or jeopardizing the
dealings with the Mazgaon property.
32. Mr. Jagtiani has submitted that as per Clause 5(b) of the
SMOU, the sum of Rs.89 Crores was to be paid by 30 th September,
2016. Thereafter, disputes arose between the parties. In January
2021, the Respondent Nos. 1 and 2 breached its obligations under the
MOU and SMOU inter alia by jeopardizing the Adani deal in regard
to the Mazgaon Property. The parties were referred to arbitration by
an Order of 8th April 2021. The Statement of Claim was filed on 16 th
August 2021. The Statement of Defence was filed by the Petitioners
on 25th September, 2021 inter alia raising the defence of breaches
committed by the Respondent Nos. 1 and 2 and lack of readiness and
willingness. The Petitioners further filed a Counter Claim. The
Application under Section 31(6) was filed by the Respondent Nos. 1
and 2 on 17th December, 2021 viz. after 5 years from the date
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
mentioned in the SMOU and after breaches being committed by the
Respondent Nos. 1 and 2 and defence being filed by the Petitioners.
33. Mr. Jagtiani has submitted that the Affidavits relied upon
by the Respondent Nos. 1 and 2 only contain an admission of the
Petitioners on the execution and existence of the MOU and SMOU.
They do not contain any admission of liability.
34. Mr. Jagtiani has submitted that the submissions made
and decisions relied upon by the Respondent Nos. 1 and 2 overlooks
the basic contention of the Petitioners that the Interim Award is
passed without considering and deciding the defence to the claim of
the Respondent Nos. 1 and 2. This defence is independent from the
counter claim and even de hors the counter claim, and hence, the
Arbitral Tribunal was required to adjudicate the defence before
granting any Interim Award. He has submitted that the present
Interim Award suffers from perversity as well as patent illegalities as
the Tribunal has given a go bye to the settled law inasmuch as the
Tribunal has proceeded to decide the 31(6) Application without
considering the defences raised by the Petitioners and without
providing reasons for not considering the defences of the Petitioners.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
He has submitted that the present case is an exceptional, unique and
compelling case for an unconditional stay of the Interim Award. He
has placed reliance upon the decision of this Court in Alkem
Laboratories Ltd V/s. Issar Pharmaceuticals Pvt Ltd.5 in this
context.
35. Mr. Ashish Kamat, learned Senior Counsel appearing
for the Respondent Nos. 1 and 2 has submitted that it is the
settled position of law that the ordinary rule is to direct the party
seeking stay of the Arbitral Award to deposit the entire awarded
amount i.e. principal and interest. An exception to the rule is carved
out in extremely exceptional circumstances. For making out a case of
unconditional stay or stay in derogation to the established rule of
100% deposit the Petitioners have to not only make out a case for
admission but also exceptional circumstances which would warrant
the exercise of discretion in favor of the Petitioners. The Petitioners
have miserably failed to make out a case for admission as for stay of
the impugned Arbitral Award. This is especially so as the present case
relates to the performance of a family settlement and where the
5 Order dtd 5/2/2024 in Interim Application No.377 of 2024 in Commercial Arbitration
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Petitioners have taken the entire benefit of the family settlement.
36. Mr. Kamat has referred to the facts in the matter as well
as the fact that the disputes and differences between the three family
groups being settled by the the execution of the family settlement as
evident by the MOU and SMOU. The dispute and differences which
have been adjudicated by the Arbitral Tribunal arise out of this family
settlement.
37. Mr. Kamat has referred to the prior proceeding including
Section 9 Arbitration Petition filed by Respondent Nos. 3 and 4 as
well as reply to the Arbitration Petition, wherein the Petitioners have
taken a stand that Respondent Nos.3 and 4 could not rely upon the
terms of the Deeds of Reconstitution of Partnership dated 1 st April,
2015 and 27th March, 2015 in view of the settlement arrived at
between the family members as recorded in the Family Settlement.
38. Mr. Kamat has submitted that the stand of the Petitioners
before this Court at the threshold and first opportunity was to
contend that the family settlement was a complete settlement
between the parties and that the rights and obligations of the three
family groups were only to be governed by the family settlement and
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
that the Petitioners were willing to fulfill their obligations under the
family settlement.
39. Mr. Kamat has also referred to the Commercial Suit
No.319 of 2020 filed by Respondent Nos. 1 and 2 upon becoming
aware that the Petitioners had forged the signature of members of
Respondent Nos. 1 and 2 creating and obtaining financial facilities
and thus, the Suit was filed to impugn the transaction documents.
He has placed reliance upon Affidavit-in-Reply to the Interim
Application taken out by Respondent Nos. 1 and 2 in the Suit,
wherein the Petitioners sought to take shelter of the family
settlement. He has relied upon the Order dated 22 nd November, 2021
passed by this Court in Interim Application No.1370 of 2020,
wherein, this Court found the Petitioners' Group acted contrary to the
terms of the family settlement. The Petitioners' Group had relied on
different versions of the same document which allegedly bore the
signatures of Respondent Nos.1 and 2.
40. Mr. Kamat has submitted that the prior proceedings and
order passed therein demonstrates that at all material times the
Petitioners accepted the family settlement and professed that they
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
were willing to honour the same.
41. Mr. Kamat has submitted that the present Arbitration
Petition ought to be considered in the conspectus of facts and factors
including that the documents in respect of which specific
performance has been sought is a family settlement. All three groups
have sought specific performance of the family settlement. The
existence, execution, validity, subsistence, binding nature and the
terms of the family settlement have admitted by the Petitioners. The
Petitioners have admitted that the parties have acted upon the family
settlement, have taken benefits under the family settlement and steps
for implementation thereof have been and continue to be taken. The
Petitioners have stated in the pleadings that they have been, and
continue to be ready and willing to abide by the terms of the family
settlement and to execute such other and further documents as may
be required for effecting transfers in terms of the family settlement.
The Petitioners have also, sought specific enforcement of the Family
Settlement.
42. Mr. Kamat has submitted that on a plain and complete
reading of the pleadings and Affidavits filed by the Petitioners, it is
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
demonstrably apparent that there are unequivocal and unambiguous
admissions which justify and warrant the passing of an Interim
Award. The Petitioners by seeking enforcement of the family
settlement have held themselves out and bound themselves to
perform all their obligations under the family settlement (including
the monetary obligations) without any reservation or precondition.
This has been correctly appreciated by the Learned Arbitrator.
43. Mr. Kamat has submitted that apart from any
unambiguous admissions contained in the Affidavits in pleadings filed
by the Petitioners and in addition to an Award for specific
performance prayed for by the Petitioners, the Petitioners themselves
had filed an Application for an Interim Award before the Arbitral
Tribunal. The filing of an Application for Interim Award by the
Petitioners is a complete and unambiguous admission by the
Petitioners that an award on admission could be and ought to be
passed by the Arbitrator at the interim stage, and the same
constitutes a complete estoppel against the Petitioners from
contending otherwise and/or making any resistence to perform any
part of their obligations (including, financial) under the family
settlement.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
44. Mr. Kamat has submitted that the family settlements are
governed by a special equity peculiar to themselves. The Courts lean
in favour of upholding family arrangements instead of disturbing the
same on technical or trivial grounds. A party who has acted upon and
taken benefits under a family arrangement is estopped from disputing
its enforceability. He has submitted that the conduct of the
Petitioners during the course of the proceedings is malafide and
fraudulent.
45. Mr. Kamat has submitted that the Respondent Nos.1 and
2 have performed all their obligations under the family settlement by
executing the necessary retirement deeds, share transfer forms and
resignation letters to effectuate the family settlement. The Statement
of Defense contains vague and evasive denials and does not answer
the point of substance. He has submitted that such vague and
unparticularized plea / denials are of no legal consequence and do
not afford any defence to the Petitioners. He has placed reliance
upon decision of the Supreme Court in Gian Chand & Brothers V/s.
Rattan Lal 6 at Paragraphs 2, 3, 6, 7, 8 to 11 and 14 and 23 to 26 in
this context.
6 (2013) 2 SCC 606
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
46. Mr. Kamat has submitted that the stand and pleas taken
by the Petitioners are inconsistent, self-contradictory and taken as an
afterthought. By seeking specific performance of the family
settlement, the other contentions and pleas of the Petitioners ought to
be considered in that context and such allegations and pleas would
not come in the way of the learned Arbitrator passing an Interim
Award.
47. Mr. Kamat has submitted that the defence taken by the
Petitioners in respect of the Respondent Nos. 1 and 2s' Application for
Interim Award were moonshine and ex-facie unsustainable. The
arguments of the Petitioners with respect to readiness and willingness
and reciprocal promises are equally misconceived. Once the
Petitioners have sought specific performance of the family settlement,
even in the absence of the readiness and willingness at the end of
Respondent Nos.1 and 2, Respondent Nos.1 and 2 would be entitled
for specific performance. Further, Respondent Nos.1 and 2 have
already complied with all their obligations under the family
settlement and there is no question of any reciprocal obligation
remaining outstanding at the end of Respondent Nos.1 and 2. Hence,
this submission is also unfounded.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
48. Mr. Kamat has submitted that the impugned Interim
Award has been passed only in respect of such claims where no
evidence is required to be lead and where no trial is required to be
held. Wherever the learned Arbitrator found that a trial was required
or some evidence was required to be led, the Learned Arbitrator has
not granted an Interim Award.
49. Mr. Kamat has submitted that it is settled law that an
Award on admission can be passed on the basis of admissions
contained either on the pleadings or otherwise. The principles behind
Order XII Rule 6 are to give the Plaintiff a right to speedy Judgment.
The provision is wide and admission can be inferred from the facts
and circumstances of the case. A Judgment on admission can be
passed on part of the claim. Purported grounds / defences which are
palpably misconceived, dishonest and vague can never afford a sound
basis to resist such an application. He has placed reliance upon the
decisions of the Supreme Court in Karam Kapahi & Ors. V/s. Lal
Chand Public Charitable Trust & Anr. 7 Paragraphs 24, 34D, 37 to 41,
47, 49 to 54 and in SRL Ltd. V/s. Techtrek India Ltd.8 at Paragraphs
2, 3, 6, 7, 8 to 11 and 14.
7 (2010) 4 SCC 753
8 Notice of Motion No.801/2013 in Suit No.337/2013
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
50. Mr. Kamat has submitted that the scope of interference in
a Petition under Section 34 is extremely narrow and restricted. The
Section 34 Court ought to refrain itself from appreciation and re-
appreciation of matters of fact as well as law. Perversity is available as
a ground of challenge under the ground of patent illegality covered
under Section 34(2)(A) of the Arbitration Act and such patent
illegality must appear on the face of the Award and must go to the
root of the matter. Erroneous application of the law does not amount
to patent illegality or perversity. The quantity and quality of evidence
falls within the exclusive domain of the Arbitrator and the Court
under Section 34 cannot re-appreciate the same. He has placed
reliance on the decision of the Supreme Court in Delhi Airport Metro
Express Pvt Ltd V/s DMRC 9 at Paragraphs 27 to 31 and Sangyong
Engineering and Construction Company Ltd V/s. NHAI at
Paragraph Nos.34 to 41.
51. Mr. Kamat has submitted that none of the grounds raised
by the Petitioners satisfy the requirement of interference with an
Arbitral Award. The grounds raised by the Petitioners are factual and
at the highest can be said to be grounds alleging erroneous
9 (2022) 1 SCC 131
10 (2019) 15 SCC 131
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
application of the law. Such grounds are not available as grounds of
challenge.
52. Mr. Kamat has submitted that the contentions of the
Petitioners that the impugned award has considered the defence of
the Petitioners on a prima facie basis is misconceived, erroneous and
not a correct construction of the Award. He has submitted that the
Petitioners raised a defence for objecting to the passing of an Interim
Award on the basis that Respondent Nos.1 and 2 were in breach of
their obligation under the Family Settlement by allegedly addressing
a notice dated 2nd February, 2021 to the Adani Group thereby
disrupting the transaction. On this basis a Counter Claim for damages
has been made by the Petitioners. The Petitioners have sought specific
performance of the family settlement. Its claim for damages is
specifically in addition to and not in lieu of specific performance. In
any event, the claim for damages is unsubstantiated and
unliquidated; is (as a matter of law) required to be proved; and as
such, does not come in the way of being required to honour an
admitted obligation and liability by way of specific performance of
the family arrangement. He has placed reliance upon Union of India
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
V/s Raman Iron Foundry 11 at Paragraphs 1, 4B, 7, 9, 10, 11 and
Suraj Sanghi Finance v/s. Credential Finance 12 at Paragraph 5 and
Reliance Project Ventures & Management Pvt. Ltd. V/s. ECL Finance
Ltd. & Ors. 13 at Paragraph 37.
53. Mr. Kamat has submitted that the defence of the
Petitioners on breach of the family settlement by Respondent Nos.1
and 2 is a red-herring. In any event, the monetary obligations of the
Petitioners are crystalized and a term of the Family Settlement. This
cannot be equated with a claim for unliquidated damages. Assuming
(whilst denying) that the Petitioners made out a case for the whole or
part of the damages claimed; such an award would be independent
of the award rendered in favor of Respondent Nos.1 and 2 and does
not affect the same in any manner. The Counter Claim for damages
does not in any manner affect Respondent Nos.1 and 2 application
for Interim Award. Further, the Award has to be read in its entirety
and Paragraph 42 of the Interim Award is specifically to be read with
Paragraph 50 of the impugned Award which clearly sets out the
reasons for the learned Arbitrator in not finally adjudicating the
11 (1974) 2 SCC 231
12 2002 (4) Mh.L.J.770
13 2019 SCC OnLine Bom 6781
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Petitioners Counter Claim.
54. Mr. Kamat has submitted that the execution of
documents to deal with properties was to generate revenue to
discharge the Sumer Group debt. This obligation to discharge the
Sumer Group debt was distinct and independent from the obligation
of the Petitioners to pay the crystalized sum of Rs.89 crores. The plea
that raising of finances in terms of Clause 2(a) was also to enable the
Petitioners to pay the amount of Rs.89 crores was not taken in the
pleadings nor was any such argument made during the arbitration
proceedings. This argument thus cannot be countenanced in a
Petition under Section 34. Further, the Petitioners have chosen not to
challenge the interim award passed in favour of Respondent Nos.3
and 4 which makes it abundantly clear that the said contention is
misconceived, malafide and taken as an afterthought.
55. Mr. Kamat has submitted that the Petitioners' contention
that on account of breach of the reciprocal obligations by Respondent
Nos.1 and 2, there has been a repudiatory breach, is not only
contrary to the record but is also contrary to law. The said contention
cannot be countenanced in the face of Section 39 of the Indian
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Contract Act, 1872. In the event of a purported repudiatory breach,
the Petitioners had two options i.e. either to repudiate / terminate
the contract or to continue with the contract with the breach. The
Petitioners have admittedly not elected to terminate the contract and
have sought specific performance of the contract. The Petitioners are
thus not entitled to raise the defence of an alleged breach by
Respondent Nos.1 and 2 as a defence to the performance of their
obligations.
56. Mr. Kamat has submitted that a lot of water has flown
under the bridge from the institution of the arbitration proceedings.
Parties have by consent performed a number of their obligations
under the family settlement. Such performance has resulted in 6
Interim Awards being passed by the learned Arbitrator by which steps
taken to further implement the family settlement were taken.
57. Mr. Kamat has submitted that the Petitioners' contention
that there is no admission on the monetary obligation of the
Petitioners, is contrary to law and pleadings on record. The
admissions contained in the pleadings and Affidavits filed by the
Petitioners is as regards the performance of the family settlement.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Once there is an admission with respect to the performance and
continued performance and especially when such party claims a
specific performance of the agreement, such admission would include
an admission to perform each of the obligations under the
agreement. No specific admission is required for each of the clauses
of the agreement.
58. Mr. Kamat as submitted that the argument of the
Petitioners that there are reciprocal obligations and that the
Petitioners are not required to fulfill their monetary obligations till
such time as the Respondents obligations are fulfilled is another red
herring. There is nothing in the family settlement to suggest that the
performance of the Petitioners financial obligation is posited on
performance of any other obligations. Second, the Petitioners own
conduct belies its present stand. This is because, the Petitioners have
claimed to have made part payments towards their obligation. Only,
the quantum is in dispute. Third, having sought specific performance,
the Petitioners have impliedly stated their willingness to perform
their obligation. Lastly the Petitioners have not stated what is the
alleged reciprocal obligation that it seeks performance of. This is
because, there is none.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
59. Mr. Kamat has submitted that a decree for specific
performance is in favor of both the Plaintiff and the Defendant. In
that context he has placed reliance upon the decision of the Supreme
Court in Hungerford Investment Trust Ltd. vs. Haridas Mundhra 14 at
Paragraph 31. The Petitioners have agreed and understood that their
obligation to pay Rs.89 crores under the family settlement is
irrevocable. The Petitioners have in part performance paid an amount
of Rs.16.025 crores. According to the Petitioners, they have paid an
amount of Rs.46.025 crores. The Petitioners had no defence
whatsoever with respect to payment of the balance of Rs.42.65
crores.
60. Mr. Kamat has dealt with the Petitioners' contention that
the family settlement is barred by limitation by submitting that the
Petitioners ought not to be permitted and this Tribunal ought not to
countenance the defence of limitation whilst considering the grant of
reliefs which would give effect to a family settlement which are
governed by a special equity peculiar to themselves. He has placed
reliance upon the decision of the Supreme Court which held that the
plea of limitation is not available in cases of implementation of family
14 (1972) 3 SCC 684
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settlement. Such settlements are essential for maintaining peace and
harmony in a family. These decisions are Kale & Others Vs. Deputy
Director of Consolidation & Ors.15 at Paragraphs 9, 10, 15, 20, 24, 33,
34 and 42 and Hari Shankar Singhania & Ors. Vs. Gaur Hari
Singhania & Others 16 at Paragraphs 42, 43, 45, 47 to 53.
61. Mr. Kamat has submitted that that the plea of limitation
is ex-facie misconceived, legally untenable and liable to be rejected as
the Petitioners have maintained that the family settlement is valid
and binding till date. They have expressed their willingness to
perform the family settlement and called upon Respondent Nos.1 and
2 to perform the family settlement. It is Petitioners' own case that
performance of the family settlement is an ongoing exercise. The
Petitioners have been part performing the family settlement in the
years 2017, 2018 and lastly in 2019. Thus, there is no merit in the
plea of limitation taken by the Petitioner.
62. Mr. Kamat has submitted that the Judgments relied upon
by the Petitioners are clearly distinguishable as the Judgments are not
in context of a family settlements and further, they are not in a
15 (1976) 3 SCC 119
16 (2006) 4 SCC 658
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
situation where the Defendants have also sought for specific
performance of the self-same agreement of which the Plaintiffs have
sought specific performance.
63. Mr. Kamat has submitted that the Petitioners have
miserably failed to make out any case for admission of the Petition.
Further, the Petitioners cannot escape the rigors of Section 36 and
claim an unconditional stay of the Arbitral Award. No exceptional
circumstances have been made out by the Petitioners warranting
grant of such a stay. There has been a consistent view of this Court
after taking into consideration of the Judgments passed by the
Supreme Court that a stay to the Arbitral Award can be granted only
upon deposit of the entire awarded amount. He has placed reliance
upon the deision of this Court in M/s Balmer Lawrie & Co. Ltd v/s.
M/s Shilpi Engineering Ltd. 17. He has distinguished the decision of
the learned Sinlge Judge of this Court viz. Sphere International
(supra) and the Judgment passed in Appeal from the said order in
Ecopack India Paper Cup Pvt Ltd (supra) relied upon by the Petitioner
as being prior to the law laid down in the Supreme Court in Toyo
17 Interim Application (L) No.779/2023 in CARBP No.1131/2018
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Engineering Corporation & Anr. V/s. Indian Oil Corporation Limited
. In the cases relied upon by the Petitioner, the admission on the
basis of which an Award on admission was passed were clearly
conditional in nature and the same were linked to the claim of the
Respondent in the arbitration proceedings and could not said to be
unconditional admissions. Further, the underlying legal principle in
Alkem Laboratories Ltd (supra) . In that case, the Learned Arbitrator
passed an Award for damages without the Claimant proving actual
damages. This Court had came to the conclusion that the award
suffered from perversity as well as certain illegalities and had given a
complete go by to the settled principles of law. In such
circumstances, the Court granted respite to the Petitioners from
depositing the awarded amount. The present proceedings are in
relation to a crystalized sum recorded in a Family Settlement which is
clearly distinguishable from that case where the award of damages
was against settled principles of law. This decision would in fact show
that a claim of damages can never come against / afford a defence to
payment of an undisputed debt.
64. Mr. Kamat has accordingly submitted that there is no
18 2021 SCC Online SC 3455
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
merit in the submissions of the Petitioners for grant of unconditional
stay of the impugned Award . Further, the Arbitration Petition makes
no valid ground under Section 34 of the Arbitration Act warrenting
admission and accordingly, the same should be dismissed.
65. Having considered the rival submissions, in my view, it
would be necessary to consider the relevant clause in the MOU which
is Clause 2(a) of the MOU which reads as under:
"Clause 2(a) of the MOU provides complete autonomy
to the RSS Group to deal with the properties 'as they
may deem fit'. This, obviously, includes the discretion to
use the proceeds to pay the BKS Group. This
understanding is also accepted by the BKS Group as is
evident from their Statement of Claim. In the Statement
of Claim, it is the pleaded case of the BKS Group that
the proceeds from the Santacruz property and Mazgaon
property were to be used to clear liability of the Sumer
Group and pay monetary consideration payable to the
BKClause 2(a) of the MOU provides complete autonomy
to the RSS Group to deal with the properties 'as they
may deem fit'. This, obviously, includes the discretion to
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
use the proceeds to pay the BKS Group. This
understanding is also accepted by the BKS Group as is
evident from their Statement of Claim. In the Statement
of Claim, it is the pleaded case of the BKS Group that
the proceeds from the Santacruz property and Mazgaon
property were to be used to clear liability of the Sumer
Group and pay monetary consideration payable to the
BKS Group19. While referring to the board resolutions
dated 1st September 2014 and 6th September 2014, the
BKS Group have pleaded "...The proceeds from the sale
of units were to be used towards clearing the liabilities
of the Sumer Group and paying the monetary
consideration payable to Bharat Group and Loonkar
Group." (emphasis supplied)"
66. It is apparent from Clause 2(a) of the MOU that the
Petitioners had complete autonomy to deal with the said properties as
they may deem fit and in the event of sale of the said properties the
proceeds therefrom were not only confined to the discharge of the
liabilities of the Sumer Group but could also be utilized towards the
19 Para 32 and 33 of Statement of Claim at Page 335 and 336 of COD - 2
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
payment of monetary consideration to the Respondent Nos. 1 and 2
under Clause 3 of the SMOU. Further, this was also the
understanding of the Respondent Nos. 1 and 2 as can be seen from
the Board Resolutions dated 1st September, 2014 and 6th September,
2014 where the Respondent Nos.1 and 2 have stated that the
proceeds from the sale of Units were to be used towards clearing the
liabilities of the Sumer Group and paying the monetary consideration
payable to the Bharat Group (Respondent Nos. 1 and 2 Group) and
Loonkar Group (Respondent Nos. 3 & 4) Group
67. Thus, the obligations under the MOU and SMOU were
inextricably linked to each other. I find that these obligations are not
independent to each other, but are reciprocal obligations. Further, it
was necessary for the Arbitral Tribunal to consider the defence of the
Petitioners to the Application for Interim Award filed by the
Respondent Nos. 1 and 2 under Section 31(6) of the Arbitration Act
particularly, where the defence of the Petitioners is of breach of
reciprocal obligations under the MOU and SMOU committed by the
Respondent Nos. 1 and 2 and which also went to the lack of
readiness and willingness of Respondents Nos. 1 and 2. This defence
can be seen from the Reply Affidavit of the Petitioners to the
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Application under Section 31(6) of the Arbitration Act, where the
specific pleaded case of the Petitioners as to the Respondent Nos. 1
and 2 having breached their reciprocal obligations under the MOU
and SMOU has been raised. Reference is made to Paragraph 17, 22
to the Statement of Defence and Paragraph 36 of the Affidavit-in-
Reply to the Application under Section 31(6) in the context.
68. I prima facie find from the impugned Interim Award that
though the Arbitral Tribunal has recorded the defence of the
Petitioners viz. that the Respondent Nos. 1 and 2 had breached their
reciprocal obligations under the MOU and SMOU, the Arbitral
Tribunal has failed to deal with this defence which in my prima face
view amounts to a patent illegality in impugned Interim Award, as
without a finding on such defence, the impugned Award has granted
monetary reliefs. Further, in order to determine the issue raised by
the Petitioners on breach of reciprocal obligations, it was encumbant
on the Arbitral Tribunal to allow evidence to be led on such issue.
The Arbitral Tribunal may not be bound by the Evidence Act and
CPC, however, the Tribunal is bound to consider the principles of the
Evidence Act and CPC and to follow the principles of natural justice.
The decision relied upon by Mr. Jagtiani for the Petitioner viz. Rashmi
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Housing Pvt. Ltd vs Pan India Infraprojects Pvt. Ltd .(supra) is
apposite.
69. The Arbitral Tribunal has without considering the
aforementioned defence raised by the Petitioners come to a
conclusion that there are admissions to support the grant of the
monetary award. It is necessary to refer to Paragraph 42 of the
impugned Award which reads as under:
"42. In my opinion, the arguments advanced by Ramesh
Shah Group are in desperation to avoid passing of an
interim award. As seen from what is extracted above,
Ramesh Shah Group has not only admitted the family
settlement as recorded in MoU and SMoU, but Ramesh
Shah Group itself is seeking performance thereof against
another two groups. In a peculiar fact of this case where
all the three parties admit the record of the family
settlement in MoU and SmoU and in addition thereto
each group wants the other groups to perform their
respective obligations. This alone to my mind is the
existence of jurisdictional facts for the purpose of
granting interim award. Again the family settlements are
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
governed by special equities and the attempt should
always be to uphold the family settlements instead of
defeating it. In support of the contention that Bharat
Shah Group and Loonkar Group are not ready and
willing a letter written to Adani Group by them was
sited. I do not wish to [express] any opinion but prima
facie it does not appear that by writing the letter results
in proving that Bharat Shah Group and Loonkar Group
were not ready and willing to perform their obligations
under MOU and SMOU. Even otherwise much water has
flown under the bridge. Ramesh Shah Group has the
control of major assets and have discharged liabilities of
the group in terms of MOU and SMOU. So if Ramesh
Shah Group desires to continue to enjoy the fruits of
MOU and SMOU it cannot defeat discharge of some of
the obligations to the other two groups. It is not the case
of Ramesh Shah group that it is willing to go back to pre-
MOU and SMOU stage. It is, therefore, inevitable that
interim award be passed to the extent possible. The
family settlement are different species of contract and
are required to be approached from an angle where its
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
validity and sanctity is upheld and is not subjected to the
technical rules to defeat performance thereof. Ramesh
Shah Group having run out of any answer to resist the
present Application have adopted this approach to delay
passing of an interim award against them. I, therefore,
reject the contention of Ramesh Shah Group. (emphasis
supplied)"
70. The Arbitral Tribunal though noting the defence raised
by the Petitioners has only expressed an opinion that Respondent
Nos. 1 and 2 by writing a letter to the Adani Group, prima facie it
does not appear that they were not ready and willing to perform their
obligations under the MOU and SMOU. However, the Tribunal has
failed to consider whether there were reciprocal obligations of the
parties to the MOU and SMOU. The Tribunal has in my prima facie
view read the SMOU on a piecemeal basis by awarding monetary
amounts without considering the reciprocal obligations and the
allegation of breach thereof by the Respondent Nos. 1 and 2 and their
lack of readiness and willingness.
71. Further, in my prima facie view there does not appear to
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
be an unequivocal admission on the part of Respondent Nos. 1 and 2
as to their liability to pay the monetary amounts to the Respondent
Nos. 1 and 2 which would warrant a Decree on Admission under
Order XII Rule 6. I find much merit in the submission of Mr. Jagtiani
that there is piecemeal reliance by the Arbitral Tribunal on pleadings
where the Petitioners have admitted the existence and execution of
the MOU and SMOU. Further, the Petitioners seeking specific
performance of the MOU and SMOU and their acting under the MOU
and SMOU as well as the MOU and SMOU amounting to family
settlement seems to be the fundamental basis for passing of the
impugned Award. However, the Arbitral Tribunal has overlooked that
the Petitioners have categorically and in unequivocal terms denied
any liability whatsoever to pay Rs.42.65 Crores to the Respondent
Nos. 1 and 2. This can be seen from the Reply Affidavit to the
Section 31(6) Application of Respondent Nos. 1 and 2.
72. I do not find merit in the submission of Mr. Kamat for
Respondent Nos. 1 and 2 that merely because the Petitioners have
sought performance of the MOU and SMOU in the counterclaim and
that the MOU and SMOU being a family settlement and acted upon
are sufficient reasons for the Arbitral Tribunal to pass a Decree on
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Admission under Order XII Rule 6 of the CPC. The reliance placed by
Mr. Kamat on the words "either on pleadings or otherwise" in the said
Order XII Rule 6 to contend that it is wide and admissions can be
inferred from the facts and circumstances of the case does not apply
to the present case. For awarding the monetary amount to
Respondent Nos. 1 and 2 as a Decree on admission, it was
imperative for the Arbitral Tribunal to consider whether the
Respondent Nos. 1 and 2 have established that there was an
unequivocal admission on the part of the Petitioners of their liability
to pay the monetary amount to the Respondent Nos. 1 and 2. I do
not prima facie find any such admission and / or that the defence
raised by the Petitioners is in any way misconceived, dishonest and
vague to resist such an Application under Section 31(6) of the
Arbitration Act.
73. The issue on limitation for the monetary claims is
not necessary to be considered in view of the aforementioned
prima facie finding that there is patent legality in the impugned
Award by not considering the defence of the Petitioner viz.
breach of reciprocal obligations under the MOU and SMOU
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
committed by the Respondent Nos. 1 and 2 group and their lack
of readiness and willingness.
74. The learned Arbitrator in Paragraph 50 of the
impugned Award has expressed an opinion that merely because
the party has made a claim for damages, this would not prevent
the Arbitral Tribunal from granting the interim Award in respect of
obligations to be performed by the parties under the family
settlement. This opinion expressed by the Arbitral Tribunal has in my
prima facie view overlooked the contention of the Petitioners that the
breaches committed by Respondent Nos. 1 and 2 were of reciprocal
obligations and such defence raised by the Petitioners was necessary
to be considered prior to the passing of an interim Award granting
the monetary amount to the Respondent Nos. 1 & 2 as the monetary
amounts would be payable by the Petitioners provided that there had
been no breach by the Respondents of their reciprocal obligations.
The Arbitral Tribunal has by referring to the counter claim for
damages failed to consider the defence of the Petitioners in the
proper perspective and hence, in my prima facie view such an
opinion expressed by the learned Arbitrator suffers from perversity.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
75. The submission of Mr. Kamat that the Petitioners having
made part payment of Rs.46.36 Crores out of Rs.89 Crores payable to
Respondent Nos. 1 and 2, there is an admission of liability to pay the
balance amount of Rs.42.65 crores, is untenable. The Arbitral
Tribunal has not passed the interim Award on the basis of part
payment made by the Petitioners. The Arbitral Tribunal has not held
that such payment amounts to admission of liability. The reference to
such part payment is only in Paragraph 57 of the interim Award for
arriving at the balance amount payable to the Respondent Nos. 1 and
2. Thus, this contention amounts to supplying reasons and
supplanting the Interim Award which is impermissible in law.
76. The reliance placed by Mr. Kamat on Consent Interim
Awards taken by the parties to contend that the Petitioners cannot
now oppose the impugned Interim Award is of no merit. There is no
reference to the Consent Interim Awards in the impugned Interim
Award and further the consent Interim Awards are not the basis of
passing the impugned Interim Award. Once again by these
contentions, there is an attempt by the Respondent Nos. 1 and 2 to
supply reasons where there are no reasons in the impugned Interim
Award.
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
77. The contension of Mr. Kamat that the Petitioners by not
challenging the very same Interim Award in favour of the Respondent
Nos. 3 and 4, cannot now challenge the impugned Award in favour of
the Respondent Nos. 1 and 2, is in my view misconceived. The
Interim Award in favour of the Respondent Nos. 3 and 4 is a separate
and distinct Award. The Petitioners and Respondent Nos. 3 and 4
appear to be in the process of settling their inter se disputes. The
Respondent Nos. 1 and 2 cannot use such a settlement as a
defence to the impugned Interim Award. Thus, in my view the
Petitioners are entitled to challenge the impugned Interim
Award of the Respondent Nos. 1 and 2 Group under Section 34
of the Arbitration Act.
78. It is pertinent to refer to the decision of this Court in
Board of Control for Cricket in India v. Deccan Chronicle
Holdings Limited20., wherein this Court has held that it is
entirely impermissible for a party to supply the reasons an
Award is supposed to have.
79. The decisions which have been relied upon by Mr.
20 2021 SCC Online Bom 834
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Kamat are in my view, confined to the facts in those cases and
are inapplicable to the present case where I have prima facie
held that the impugned Interim Award has been passed without
deciding the defence of breaches of reciprocal obligations
committed by the Respondent Nos.1 and 2 and which goes to
the root of their readiness and willingness. This would include
the decisions on family settlement, which in my prima facie view
are inapplicable, particularly in a case where a Decree on
Admission under Order XII Rule 6 of the CPC is being sought
and for which unequivocal admission of the Petitioners liability
to pay Respondent Nos. 1 & 2 the monetary amounts in the
present case would be required to be established for passing
such monetary decree. This, given my prima facie finding that
the impugned Interim Award lacks reasons and fails to consider
the defences raised by the Petitioners herein.
80. Thus, I prima facie find that the impugned Interim
Award suffers from perversity as well as patent illegality and has
given a go by to the settled law in as much as Arbitral Tribunal
has passed the impugned Interim Award as a Decree on
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Admission under Order XII Rule 6 of the CPC in the Section
31(6) Application without considering the defences raised by
the Petitioners and without providing reasons for not
considering the defences of the Petitioners.
81. Accordingly, this is an exceptional, unique and
compelling case for an unconditional stay of the impugned
Interim Award.
82. The Interim Application is allowed in terms of prayer
Clause 'a'. Accordingly, the effect, implementation and
enforcement of the impugned Interim Award dated 15th
December, 2022 duly corrected by the Order dated 23 rd
December, 2022 passed by the Arbitral Tribunal is stayed.
83. The Interim Application is accordingly disposed of.
84. In view of this order, the Commercial Arbitration
Petition (L) No.10500 of 2023 is admitted and hearing
expedited.
[ R.I. CHAGLA, J. ]
