Bombay High Court
Ashok Kumar Kothari And 5 Ors vs Sanwarlal Agarwal And 4 Ors on 19 September, 2024
Author: Abhay Ahuja
Bench: Abhay Ahuja
2024:BHC-OS:14530
501-EXA-1041-22-EXAL-139-20.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
EXECUTION APPLICATION NO. 1041 OF 2022
ASHOK KUMAR KOTHARI & OTHERS )JUDGMENT CREDITORS
V/s.
SANWARLAL AGARWAL & OTHERS ).JUDGMENT DEBTORS
WITH
EXECUTION APPLICATION (L) NO. 139 OF 2020
SANWARLAL AGARWAL & OTHERS )JUDGMENT CREDITORS
V/s.
ASHOK KUMAR KOTHARI & OTHERS ).JUDGMENT DEBTORS
WITH
INTERIM APPLICATION (L) NO. 28981 OF 2021
AND
INTERIM APPLICATION (L) NO. 5203 OF 2021
AND
INTERIM APPLICATION NO. 546 OF 2022
IN
EXECUTION APPLICATION NO. 1041 OF 2022
WITH
NOTICE (L) NO. 31837 OF 2022
IN
EXECUTION APPLICATION NO. 1041 OF 2022
Mr.Anil Singh, Senior Advocate a/w. Mr.Amogh Singh, Mr.Vikas Mishra,
Mr.Nirav Karia, Mr.Adarsh Vyas, Mr.Rohit Yadav, Ms.Krutisha Pandey,
Ms.Monika Shekhawat i/by Mr.Bhavin Bhatia, Advocate for the
Applicants/Judgment Creditors in EXAL/139/2020 and for the
Judgment Debtors in EXA/1041/2022.
Mr.Dinyar Madon, Senior Advocate a/w. Mr.Vishal Kanade, Mr.Bhadrish
Raju i/by Mr.Jamshed Ansari, Advocate for the Judgment Creditors in
EXA/1041/2022 and for the Judgment Debtors in EXAL/139/2020.
CORAM : ABHAY AHUJA, J.
RESERVED ON : 28th AUGUST 2024
PRONOUNCED ON : 19th SEPTEMBER 2024
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501-EXA-1041-22-EXAL-139-20.doc
JUDGMENT :
1. A company by the name of Special Ear, Nose and Throat Hospital
Private Limited (the "said company") was incorporated on 2 nd April
2009 with the object to construct a multi-speciality hospital on a parcel
of land called as "Hospital Plot AM6" admeasuring 4897.40 square
meters and bearing CTS No.827/C/1/20 situate at Dindoshi, Malad
(East), Taluka Borivali, Mumbai (the "project") by the Defendants (the
"Agarwals") in Suit No.844 of 2019 (the "said suit") and the Agarwals
were 100% shareholders of the said company till 8 th May 2012. On 8th
May 2012, the Plaintiffs (the "Kotharis") in the said suit acquired 50%
shareholding in the said company. Accordingly, the shareholding of the
said company was equally divided between the Kotharis and the
Agarwals.
2. The Kotharis advanced sum of Rs.10,30,27,700/- to the said
company as an interest free loan by way of quasi-equity and the
Agarwals had also advanced a sum of Rs.10,32,55,000/- to the said
company as an interest free loan by way of quasi-equity.
3. Around 27th March 2019, differences arose between the parties
with respect to the implementation of the project, which differences
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were sought to be settled by a mutual agreement whereby both the
groups decided to bid against each other, in order to acquire and have
full control of 100% shareholding of the said company. The Agarwals
made a bid of Rs.35 crores for purchase of the 50% shareholding of the
Kotharis and in counter thereto, the Kotharis made a bid of Rs.36.75
crores for the purchase of the 50% shareholding of the Agarwals. The
Agarwals did not increase their bid and as a result, the Kotharis were
the successful bidder.
4. On 28th March 2019 the Agarwals addressed an email to the
Kotharis regarding the terms and conditions of the agreement arrived
at on 27th March 2019.
5. The Kotharis, thereafter, addressed two emails, one on 29 th
March 2019 and the second on 3 rd April 2019 further adding terms to
the email dated 28th March 2019. The Agarwals rescinded from the
entire deal vide email dated 29th April 2019.
6. As disputes and differences arose between the two with respect
to the performance of the said email/agreement dated 28 th March
2019, on 2nd May 2019, the Kotharis filed the said Suit no.844 of 2019
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against the Agarwals before this Court praying for specific performance
of the agreement arrived at on 27 th March 2019 and reduced to writing
by email/agreement dated 28 th March 2019. On 30th July 2019, the
Kotharis also filed a Notice of Motion No.1916 of 2019 in the said suit
praying for a judgment on admission under Order XII Rule 6 of the
Code of Civil Procedure, 1908 ("CPC").
7. Thereafter, on 5th August 2019, this Court (Coram : K.R. Shriram,
J.) decreed the said suit in view of the settlement on behalf of the
Defendants that they are submitting to a decree in terms of prayer
clauses (a) to (d) to the plaint. The said order is usefully quoted as
under :
"1 Mr. Saraogi and Mr. Hakani on instructions from Dr. Vikas
Agarwal, Defendant no.2, who says that he has instructions on
behalf of other defendants to make the statement, state that they
are submitting to a decree in terms of prayer clauses (a) to (d),
which read as under:
"(a) That this Hon'ble Court be pleased to declare that the said
agreement arrived at on March 27, 2019 which is reduced to
writing by the defendant no.2 and is recorded by the email dated
March 28, 2019 in respect of the 50% shares held by the Agarwal
Group in the capital of the plaintiff no.6 is valid, subsisting and
binding upon the defendants and upon persons claiming by,
through or under the defendants;
(b) That this Hon'ble Court be pleased to order and decree the
defendant to specifically perform the said agreement arrived at
on March 27, 2019 for sale of the 50% shareholding of the
defendants in the plaintiff no.6 as reduced into writing and as
recorded by the email dated March 28, 2019 of the defendant
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no.2 inter alia by :
(i) executing, signing and attesting all necessary deeds and
documents necessary to transfer, assign and vest the fifty percent
shareholding of the defendants in the plaintiff no.6 in favour of
the plaintiffs or their nominees;
(ii) handing over original title deeds, documents and writings in
respect of the suit plot which are lying with the defendant no.2
and in the locker to be operated jointly by the defendant no.2
and the plaintiff no.2 to the plaintiffs.
(iii) doing or causing to be done all acts, deeds, matters and
things and to sign, execute and register all deeds, documents and
writings as may be necessary for the transfer of the said 50%
shares of the Agarwal Group to the plaintiff nos.1 to 5 and/or to
their nominees free of all claims of the defendants.
(iv) Tendering their resignation from Directorship of the plaintiff
no.6 company.
(c) That this Hon'ble Court be pleased to order and decree the
defendants to do or cause to be done all acts, deeds, matters and
things and to sign and execute all deeds, documents or writings
necessary under the supervision of this Hon'ble Court for the
purposes of the order of specific performance or to give effect to
the reliefs sought in terms of prayer (b) above.
(d) That for the purposes aforesaid all inquiries be made, awards
be made, orders be passed, directions be given and accounts be
taken as this Hon'ble Court may deem just and proper in the facts
and circumstances of the case."
2 Time mentioned in the agreement will begin from today.
3 Suit accordingly stands disposed. Notice of motion accordingly
also stands disposed.
Refund of court fees, if any, in accordance with rules. Drawn up
decree dispensed with.
All to act on authenticated copy of this order."
8. On 9th August 2019, the Kotharis made payment of the token
amount equivalent to 5% of the agreed consideration of Rs.36.75
crores to the Agarwals in accordance with the terms of the
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email/agreement dated 28th March 2019 and the decree as above. The
Agarwals admittedly have encashed the said cheque of 5% payment of
the token amount by the Kotharis.
9. In or around August / September 2019, disputes pertaining to
inclusion of loan amount of Rs.10,32,55,000/- in the consideration of
36.75 crores were raised by the Agarwals, the Agarwals contending
that their loan amount was over and above the consideration of
Rs.36.75 crores and was not to be included in the consideration of
36.75 crores.
10. Thereafter, the Kotharis filed Execution Application No. 1041 of
2022 on 17th September 2019 for execution of the decree. On 10 th
October 2019, the Kotharis filed Interim Application No.166 of 2019 in
their execution application. On 20th January 2020, the Agarwals filed
Execution Application (L) No.139 of 2020 before this Court also in
execution of the said decree. The Agarwals also filed Interim
Application No.692 of 2020 in the said execution application.
11. It has been submitted, that on 10th February 2020, the Kotharis
amended their Execution Application No.1041 of 2022 to provide for
501-EXA-1041-22-EXAL-139-20.doc
the default mechanism contained in the agreement dated 27 th March
2019 as reduced into writing by the Agarwals in their email dated 28 th
March 2019.
12. It has been submitted that the default / reverse mechanism
provides for automatic sale of the Kotharis' shares in the said company
to the Agarwals upon the Kotharis committing any default in payment
of the installments of the consideration payable to the Agarwals as
recorded in the email dated 28th March 2019.
13. It has been submitted that on 4th January 2021 the Executing
Court (Coram : A.K. Menon, J., as His Lordship then was) accepted the
submissions of the Kotharis and held that the loan amount of
Rs.10,32,55,000/-was to be included in the consideration of Rs.36.75
crores and accordingly, Interim Application No.166 of 2019 came to be
disposed.
14. Against the order dated 4th January 2021, the Agarwals filed two
appeals viz. Appeal (L) No.3075 of 2021 and Appeal (L) No.3079 of
2021 before the Appeal Court. On 14 th June 2022 the Appeal Court
dismissed both the appeals and upheld the order dated 4 th January
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2021 which had accepted the submissions of the Kotharis that the loan
amount of Rs.10,32,55,000/- was to be included in the consideration of
Rs.36.75 crores.
15. The Agarwals challenged the said order dated 14 th June 2022
before the Hon'ble Supreme Court by way of two civil appeals. On 21 st
February 2022 the Hon'ble Supreme Court set aside the order dated
14th June 2022 and held that the loan amount of the Agarwals was not
to be included in the consideration of Rs.36.75 crores in view of the
terms of the said email /agreement dated 28 th March 2019 and the said
decree.
16. Thereafter, the Kotharis preferred two Review Petitions before the
Hon'ble Supreme Court which inter alia, raised a ground with respect
to the reverse mechanism /automatic sale, however the two Review
Petitions came to be rejected on 3rd October 2023.
17. The issue raised before this Court is with respect to the reverse
mechanism viz. purchase by the Agarwals of the shares of the Kotharis,
viz. the reverse mechanism, as noted earlier, provides for automatic
sale of the Kotharis' shares in the said company to the Agarwals, upon
501-EXA-1041-22-EXAL-139-20.doc
the Kotharis committing default in payment of the installments of the
consideration payable to the Agarwals, as recorded in the email dated
28th March 2019.
18. The said email dated 28th March 2019 has been reproduced in
paragraph 2 of the order of the Hon'ble Supreme Court dated 21 st
February 2023 which includes the reverse sale / automatic sale.
Paragraph 2 of the said order is usefully quoted as under :
"The parties entered into a joint venture agreement in 2017 to
operate a multi-speciality hospital in Malad, Mumbai. As equal
shareholders, each brought in Rs.10 crores as interest-free loan
to finance the project. On 27.03.2019, the respondents
(hereafter, 'Kotharis') bid for the entire 50% shareholding of the
appellants (hereafter, 'Agrawals'), which was accepted, and
reduced in writing by way of an email dated 28.03.2019, which
stated the terms as follows :
"The te(r)ms and conditions agreed by you are also agreeable to
us, which are as follows,
1. Consideration - 36.75 crores
2. Token 5 percent of the consideration
3. Further 50% of consideration within 45 days, after which
Kothari group will be allowed to start work on the project.
4. remaining 45 percent of consideration within 120 days.
Failure to pay 50% amount within 45 days will lead to forfeiture
of token amount of 5 percent and automatic sale of 50% shares
of Kothari group to Agrawal group at their bid price of 35 crore
on same terms and conditions starting 45 th day. Failure to pay
the final 45 percent in time will lead to forfeiture of 5 percent of
the consideration and automatic sale of 50 percent shares of
Kothari group to Agrawal group at their bid price of 35 crore on
same terms and conditions starting 120 th day. There will be no
interest paid by the Agrawal group on the balance consideration.
Deal date March 27, 2019."
501-EXA-1041-22-EXAL-139-20.doc
19. I have heard Mr.Anil Singh, learned Senior Counsel for the
Judgment Creditors in Execution Application (L) No.139 of 2020 and
for the Judgment Debtors in Execution Application (L) No.1041 of
2022 and Mr.Dinyar Madon, learned Senior Counsel for the Judgment
Creditors in Execution Application (L) No.1041 of 2022 and for the
Judgment Debtors in Execution Application (L) No.139 of 2020 and
with their able assistance considered the papers and proceedings and
have given my thoughtful consideration to the rival contentions.
20. Mr.Anil Singh, learned Senior Counsel appearing for the
Agarwals would submit that since the decree passed in Suit No.844 of
2019 by consent of the Defendants viz. the Agarwals was in a suit for
specific performance filed by the Kotharis as Plaintiffs, wherein the
Kotharis had sought specific performance with respect to the sale of
50% shareholding of the Agarwals in the said company as reduced into
writing and as recorded by email dated 28 th March 2019 and that there
being no mention of any reverse mechanism and / or purchase by the
Agarwals of the shares of the Kotharis in the said company in the
prayers, there is no question of the Kotharis now seeking to invoke the
reverse mechanism to have the Agarwals purchase the shares of the
Kotharis in the said company.
501-EXA-1041-22-EXAL-139-20.doc
21. Mr.Singh would submit that the Agarwals had submitted to the
decree only in terms of prayer clauses (a) to (d) which do not speak of
the reverse mechanism or the Agarwals purchasing 50% shareholding
of the Kotharis. Mr.Singh would submit that, infact, in the Notice of
Motion No.1916 of 2019 in Execution Application (L) No.1713 of 2019
filed by the Kotharis, the Kotharis had sought for the alternative prayer
for implementation of the reverse mechanism i.e. purchase of shares by
Agarwals of the Kotharis's shareholding in the said company but the
same was not the subject matter of the order dated 5th August 2019 and
the said suit was disposed of in terms of the reliefs granted, although
there were prayers sought for in the said Notice of Motion.
22. Mr.Singh has drawn the attention of this Court to order dated 5 th
August 2019 and also to the pleading of the Kotharis, as stated in
affidavit dated 25th November 2019 filed in the Interim Application
No.166 of 2019, and in particular, the following averment on oath
made in the said affidavit :
"7. The said Notice of Motion was called for hearing on August
5th, 2019. At the said hearing it was submitted on behalf of the
judgment Creditors that the Judgment Creditor nos.1 to 5 were
ready and willing to submit to a decree that the Judgment
Creditors nos.1 to 5 shall exit the Judgment Creditor no.6 upon
payment by the Judgment Debtor to them of a total sum of
Rs.43,46,52,700/- (Rs.Forty Three Crores Forty Six Lakhs Fifty
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Two Thousand Seven Hundred Only) in terms of Clause 4 of the
agreement dated March 27 2019 which reduced into writing by
the Judgment Debtor no.2 in his email dated March 28 th 2019.
The Judgment Debtor no.2 was personally present in court on
August 5, 2019 and upon inquiry, he declined to rely upon the
Judgment Debtor own interpretation of the contract (that the
sum of Rs.36.75 crores payable by the Judgment Creditors is
exclusive of the debt payable by the Judgment Debtor no.6 to the
Judgment Debtor) and to make payment to the Judgment
Creditor (in accordance with such interpretation) of the total
sum of Rs.43,46,52,700/- (Rupees Forty Three crores Forty Six
Lakhs Fifty Two Thousand Seven Hundred only) as computed
above. In such circumstances, having regard to the untenable
stand of the Judgment Debtor and the fact that the Judgment
Debtor cannot approbate and reprobate, the Hon'ble Court after
hearing the counsel for the Judgment Debtor and the Advocates
appearing for the Judgment Debtor this Hon'ble Court was
pleased to decree the suit in terms of the prayer clauses (a) to
(d) of the plaint reproduced above."
23. Mr.Singh has also invited the attention of this Court to the
counter affidavit dated 6th September 2022 filed by the Kotharis in the
Special Leave Petition (SLP) filed in the Hon'ble Supreme Court and in
particular to paragraph 25 thereof, which is quoted as under:
"25. That the Kotharis submit that the Agrawals are not entitled
to any interim relief inasmuch as they have lost in both the
courts below. Insofar as the prayer of the Agrawals for directing
Kotharis to deposit a sum of Rs.36.75 Cr. (less the amount of
Rs.1,83,75,000/-) with interest is concerned, it is submitted that
it is the Agrawals who are thwarting the execution of the decree
resulting into filing of an execution application by the Kotharis.
It is submitted that Kotharis have always been and ready and
willing to pay the balance amount in terms of the impugned
orders and decree dated 05.08.2019."
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24. Mr.Singh would submit that, from the above, it is clear that the
entire understanding of the Kotharis was restricted to explaining the
nature of how they would purchase the shares of the Agarwals. That,
the Kotharis themselves understood and stated that the decree was
granted in terms of prayer clauses (a) to (d) of the plaint and it is not
their case that the decree was on the basis of the reliefs sought in the
Notice of Motion. Mr.Singh would submit that even before the Hon'ble
Supreme Court the contention of the Kotharis in 2022 i.e. well after the
period of 120 days referred to in the email dated 28 th March 2019 had
expired, was that they have been and are ready and willing to pay the
purchase price to the Agarwals.
25. Mr.Singh would submit that apart from the fact that the decree
on admission dated 5th August 2019 does not speak about the issue of
reverse mechanism, the said issue has been finally concluded by the
order of the Hon'ble Supreme Court dated 21 st February 2023 in SLP
No.1312-13 of 2023 and also by the dismissal of the Review Petitions
(Civil) No.477-478 of 2023 by order dated 3rd October 2023 of the
Hon'ble Supreme Court. Mr.Singh submits that the issue has attained
finality and cannot be re-agitated.
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26. Mr.Singh would further submit that the Kotharis are only trying
to delay the execution on one pretext or the other. Firstly, they inter
alia tried to include a loan advanced to the company as part of the
decree which is negated by the Hon'ble Supreme Court by a detailed
judgment which is reported in (2013) 7 SCC 307. The entire claim of
Kotharis, at this stage, is untenable, as the same has been decided all
the way upto the Hon'ble Supreme Court, whereby the Hon'ble
Supreme Court vide its judgment dated 21 st February 2023 has held
that the agreement / email dated 28 th March 2019 only alludes to the
sale of 50% share holding of the Defendants i.e. Agarwal group.
27. The Hon'ble Supreme Court has specifically held that the decree
in terms of prayer clauses (a) to (d) on agreement of both the parties
alludes only to purchase of the sale of 50% share holding of the
Defendants i.e. Agarwals.
28. The Hon'ble Supreme Court has further observed that there
cannot be addition to the terms of the consent embodied in the email
dated 28th March 2019 which were agreed upon by the parties, since
the decree was drawn by consent of both the parties at admission stage
itself.
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29. The now raised contention of reverse mechanism i.e. Agarwals
buying back the shares of Kotharis was agitated before the Hon'ble
Supreme Court by filing a Review Petitions. It is pertinent to note that
the said Review Petitions (Civil) no. 477-478 of 2023 was placed in the
open court and after argument the same was dismissed by an order
dated 3rd October 2023 and draws the attention of this Court to
paragraph 2 and grounds (F) and (K) of the said Review Petitions in
support.
30. It is submitted that in an affidavit dated 25 th November 2019, the
Agarwals had specifically disputed these contentions and reiterated
that performance was sought and granted only with respect to the
purchase of Agarwal group shares and adjudicated in the nature of a
consent decree. Therefore, there is no question of any reverse
mechanism after the suit has been decreed.
31. That, the Hon'ble Supreme Court dismissed the Review Petitions
filed by the Kotharis on 3 rd October 2023 after hearing the parties in
the open Court. In view of the aforesaid fact, it is amply clear that the
specific performance granted in the decree is only qua the shares of
Agarwal group to be sold to the Kotharis. The Kotharis are trying to add
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something into the decree by way of the Execution Application which is
impermissible in law. Learned Senior Counsel submits that it is well
settled legal position that an Executing Court cannot travel beyond the
order or decree under execution, it gets jurisdiction only to execute the
order only in accordance with the procedure laid down under Order
XXI of CPC as held in Rameshwar Dass Gupta Vs. State of U.P. and
Another1.
32. It is further submitted that the Hon'ble Supreme Court has held
that the decree in question is not ambiguous and there is no need to go
behind the decree and the decree is to be determined by itself.
33. That, the order dated 5th August 2019 ex facie, does not address
nor grant the reverse mechanism. The Agarwals had not consented to
the reverse mechanism. Infact, considering the same was not even a
relief sought in the suit, the question of the Agarwals consenting to a
relief not sought would even otherwise not have arisen.
34. That, the decree is on admission, only in respect of prayer clauses
(a) to (d), which only speaks about declaration of Agarwals' share of
1 (1996) 5 SCC 728
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50% and sale of Agarwals' share and all consequential relief in that
respect.
35. Mr.Singh would submit that it is also pertinent to note that
immediately after passing the decree dated 5 th August 2019, there were
two letters addressed by the Kotharis on 9 th August 2019 and 21st
August 2024. The Advocate for Kotharis addressed the aforesaid
communications to the Advocate of Agarwals, wherein there is no
mention of reverse mechanism and/or purchase of Kotharis' shares by
Agarwals.
36. With reference to the contention of the Kotharis that a reference
to the time mentioned in the agreement begins from the date of the
decree means that the reverse mechanism was decreed, it is submitted
that the said submission is contrary to everything stated herein. That,
the timelines were necessary even for the purchase, considering
payments had to be made in accordance with the timelines. This by
itself, especially in light of the above submissions, can never be read as
to imply something and thereby adding to the consensual decree.
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37. Mr.Singh would submit that the contention on behalf of the
Kotharis that a decree has not been drawn up in terms of Order XXI
Rule 31 read with Order XXI Rule 34 is in the teeth of the order dated
5th August 2019 which specifically states :
"5. Drawn up decree dispensed with."
38. As regard to submission made by Plaintiff / Judgement Creditor
referring to paragraph 21 of affidavit dated 25 th November 2019,
Mr.Singh would submit that in the entire affidavit and particularly in
paragraphs 17, 19 and 20, Agarwals have repeatedly said that it is the
Kotharis who have agreed to acquire shares of Agarwals. The decree is
also for the sale of Agarwals' shares which is valid, subsisting and
binding and that Plaintiff/Judgement Creditor has no intention to go
contrary to the decree. Mr.Singh refers to paragraphs 17, 19 and 20 of
the said affidavit in support.
39. Mr.Singh, learned Senior Counsel for the Agarwals, submits that
in view of the aforesaid, the Execution Application (L) No. 139 of 2020
deserves to be allowed in terms of prayer clauses (i) to (v) and
Execution Application 1041 of 2022 to be dismissed.
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40. On the other hand, Mr.Dinyar Madon, learned Senior Counsel for
the Kotharis, would submit that the plaint in the said suit clearly
demonstrates that the Kotharis have sought reliefs qua the specific
performance of the agreement arrived on 27 th March 2019 which was
reduced into writing by email / agreement dated 28 th March 2019 in its
entirety including the reverse mechanism. That, the Single Judge
accepted the consent / submission of the Agarwals to the terms of the
prayer clauses (a) to (d) of the plaint and passed the said decree,
however, it has been consciously recorded in paragraph 2 of the said
decree that the time mentioned in the agreement would begin from the
date of the said order viz. 5th August 2019 and the time stipulated
therein that the Kotharis have performed its part of the contract by
making payment of 5% of the token amount to the Agarwals under the
belief that the loan amount of the Agarwals was included in the
consideration of Rs.36.75 crores, which the Hon'ble Supreme Court
rejected by order dated 21 st February 2023. That, in the interregnum,
the time period of 45 days from the date of the said decree for making
the further payment of 50% by Kotharis to the Agarwals, as mentioned
in the email dated 28th March 2019 read with the said decree, had
passed. As a result, the 5% token amount was forfieted and the 50%
shareholding of the Kotharis to the Agarwals was automatically sold for
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a consideration of Rs.35 crores as provided in the email dated 28 th
March 2019 read with the decree. Mr.Madon would submit that in
view thereof, the relief with respect to the default/reverse mechanism
as prayed for in the Execution Application No.1041 of 2022 deserves to
be allowed by this Court and the Execution Application (L) No.139 of
2020 of the Agarwals is liable to be dismissed.
41. Mr.Madon would submit that paragraph 13 of the order dated
21st February 2023 passed by the Hon'ble Supreme Court records that
the only issue for consideration is whether the sum of Rs.36.75 crores
stipulated in the agreement by email dated 28 th March 2019 was
inclusive of the loan amount of Rs.10,29,55,000/- or not and that the
Hon'ble Supreme Court did not consider whether the email /
agreement or the decree incorporated the reverse mechanism or not.
42. That, the decree has been passed for specific performance of the
email / agreement dated 28 th March 2019 and the same cannot be read
in part and has to be performed in whole for the purposes of execution.
43. Mr.Madon would submit that the said two civil appeals were filed
against the said final judgment and order dated 14 th June 2022 of the
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Division Bench of this Court wherein, the order dated 4 th January 2021
of the Executing Court was affirmed.
44. It is submitted that this Court while passing the said impugned
orders has considered and dealt only with the issue pertaining to the
inclusion of the loan amount in the consideration mentioned in the said
email/agreement dated 28th March 2019 and vide the said impugned
orders, this Court have accepted the Kotharis version and held that the
loan amount of Rs.10,32,55,000/-as claimed by the Agarwals is
included in the consideration of Rs.36.75 crores. That the said
impugned orders have not considered the fact as to whether the
email/agreement or the decree incorporated the reverse mechanism or
not.
45. Mr.Madon submits that the issue which was assailed before the
Executing Court, the Division Bench of this Court and the Hon'ble
Supreme Court was limited to the issue as to whether the loan amount
was included in the consideration of Rs.36.75 crores as stipulated in
the said email/agreement dated 28 th March 2019 or not. The reverse
mechanism was not considered by any of the said three Courts.
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46. Mr.Madon would submit that the parties in the said two civil
appeals have advanced their submissions with respect to the only issue
on inclusion of loan amount in the consideration mentioned in the said
email/agreement dated 28th March 2019 before the Hon'ble Supreme
Court and that the Hon'ble Supreme Court has expressly recorded
under the head of 'Analysis' at paragraph 13 of the said order dated 21 st
February 2023 that the only issue which falls for its consideration is
whether the loan amount is included in the sum of Rs.36.75 crores as
stipulated in the said email/agreement dated 28th March 2019.
47. It is submitted that it is on an analysis of only this issue that the
Hon'ble Supreme Court has rendered its finding at paragraph 21 of the
said order dated 21st February 2023 holding that both the learned
Single Judge and the Division Bench of this Court have expanded the
decree by interpreting that the Agarwals' silence is acquiescence to the
inclusion of the loan amount. In paragraph 21 of its Order the Hon'ble
Supreme Court has held that there can be no additions to the terms of
the consent embodied in the email dated 28 th March .2019 since the
decree was drawn by consent in terms thereof. In effect the Hon'ble
Supreme Court has held that decree is in terms of the email dated 28 th
March 2019 and that there cannot be any deviation therefrom. Namely,
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that there cannot be any additions or deletions. If the case of the
Agrawal Group is to be accepted, then the entire reverse mechanism
contained in the email dated 28 th March 2019 would be required to be
deleted. This would do violence to the order of the Hon'ble Supreme
Court.
48. That a conjoint reading of the said impugned orders coupled
with paragraphs 8, 13 and 21 of the said order dated 21 st February
2023 clearly establish that the only issue which has been considered
and decided in the said order dated 21 st February 2023 is that the loan
amount is not included in the consideration of Rs.36.75 crores
stipulated in the said email/agreement dated 28th March 2019.
49. It is submitted that infact, in paragraph 12 of the said order
dated 21st February 2023, the Hon'ble Supreme Court has observed that
the agreement between the parties is to be found in the email dated
28th March 2019 and this email itself is reproduced in paragraph 2
which included the reverse sale/automatic sale.
50. Mr.Madon would, therefore, submit that the decree categorically
records an agreement as reduced in writing and as recorded by the
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email dated 28th March 2019 to be performed, inter alia by prayer
clauses b(i) to (iv) and the said decree does not stipulate that only a
part of agreement as reduced in writing and as recorded by the email
dated 28th March 2019. That, accepting such an argument of the
Agarwals would lead to this Court going behind the decree, which is
not permissible in execution proceedings under Section 47 read with
Order XXI of the CPC.
51. It is submitted that the submission by the Agarwals that the
Kotharis advanced the contention of the default/reverse mechanism
after the order dated 21st February 2023 was passed by the Hon'ble
Supreme Court in their Review Petitions is also not supported by the
facts of the case because the Kotharis had amended their Execution
Application No.1041 of 2022 on 10 th February 2020 even before the
judgment and order of the learned Single Judge dated 4 th January 2021
in Interim Application No.166 of 2020.
52. Mr.Madon would submit that the Agarwal group has accepted
and admitted that the decree includes and incorporates the reverse
mechanism. That, the Agarwal group have admitted that although they
are entitled to forfeit the first tranche they have chosen not to do so.
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The issue of forfeiture will only arise in the background of default
mechanism/reverse sale scenario. Their stand at paragraph 21 of the
affidavit in reply dated 25th November, 2019 to the Interim Application
No.166/2019 is reproduced hereunder for reference:
"21. I say that though after making payment of 5% amount, the
judgment creditors were required to pay additional amount and
in the absence thereof, I have been made entitled to forfeit the
amount paid by them, however, I have no intention to do so"
(Emphasis supplied)"
53. It is submitted that, therefore, right from the beginning viz. even
before the order dated 4th January 2021 of the learned Single Judge of
this Court, the Agarwal group had admitted and was fully aware and
mindful of their liability under the default/ reverse mechanism as set
out in the contract dated 27th March 2019 / email dated 28th March
2019.
54. That, therefore, there was no occasion for the executing Court,
the Division Bench of this Court or the Hon'ble Supreme Court
considering as to whether the decree included the reverse mechanism
or not as the Agarwal group had admitted in their affidavit in reply that
the reverse mechanism was included in the decree.
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55. Mr.Madon would, therefore, submit that the said decree records
that the transfer of 50% shares would be in accordance with the said
email/agreement dated 28th March 2019, hence for the purpose of
execution of the said decree, the terms of the contract as they stand
have to be incorporated, including the default/automatic reverse sale.
Mr.Madon has relied upon the decision of the Hon'ble Kolkata High
Court in the case of Kartick Chandra Pal vs. Dibakar Bhattacharjya2.
56. Mr.Madon would submit that the Hon'ble Supreme Court by an
order dated 3rd October 2023 dismissed the Review Petitions filed by
the Kotharis in limine without passing a speaking order.
57. Mr.Madon would further submit that the contention of the
Agarwals that the Kotharis have raised the plea of the second part of
the contract with respect to the reverse mechanism/automatic sale so
as to delay the execution of the decree is incorrect as the performance
of the second part of the contract had already been sought for in the
Execution Application since 10th February 2020 whereas the Hon'ble
Supreme Court has passed its order only on 21 st February 2023 and 3rd
October 2023.
2 350 ILR 1960 Cal
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58. Mr.Madon submits that the letters dated 9th August 2019 and 21st
August 2019 cannot be relied upon and referred to by the Agarwals
since, the said letters are addressed post-decree by the Kotharis to the
Agarwals and that the Hon'ble Supreme Court in paragraph 21 of its
order dated 21st February 2023 has clearly held that there cannot be
any addition to the terms of the consent as embodied in the email
dated 28th March 2019. Hence, reference to the said letters is
impermissible and cannot be looked into.
59. Mr.Madon has submitted that while seeking interim relief for
deposit of the balance 95% of the agreed consideration of Rs.36.75
crores from the Kotharis in this Court, the Agarwals have failed to
consider Order XXI Rule 34 of the CPC which provides the manner and
procedure for execution of a decree.
60. Mr.Madon would further submit that the said decree pertains to
transfer of the 50% shareholding of the said company from one group
to another group. For the said purpose, several forms,
declarations, resignation letters, writings and / or documents are
required to be executed by either the Kotharis or the Agarwals after
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following the procedure laid down in the provisions of Rule 34 of Order
XXI of the CPC.
61. That, therefore, the relief of interim deposit of the 95% amount
of the agreed consideration of Rs.36.75 crores cannot be sought for by
the Agarwals by circumventing the procedures laid down in Order XXI
Rule 34 of the CPC.
62. Mr.Madon further submits that, in any event, in view of the
reverse mechanism it is the Agarwals who has automatically purchased
the Kotharis' shares and hence the Agarwals have to make payment to
the Kotharis. Hence, no question arises of the Kotharis depositing any
amounts in this Court since the Kotharis have to recover monies from
the Agarwals.
63. Mr.Madon would submit that in view of the above, the relief with
respect to default/reverse mechanism as prayed in Execution
Application No.1041 of 2022 deserves to be allowed by this Court and
the Execution Application (L) No.139 of 2020 of the Agarwals is liable
to be dismissed with compensatory costs by this Court.
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64. It is not in dispute that the said Suit No.844 of 2019 was filed by
the Kotharis against the Agarwals for specific performance with the
following prayers :
"(A) That this Hon'ble Court be pleased to declare that the said
agreement arrived at on March 27, 2019 which is reduced to
writing by the defendant no.2 and is recorded by the email dated
March 28, 2019 in respect of the 50% shares held by the Agarwal
Group in the capital of the plaintiff no.6 is valid, subsisting and
binding upon the defendants and upon persons claiming by,
through or under the defendants;
(B) That this Hon'ble Court be pleased to order and decree the
defendant to specifically perform the said agreement arrived at
on March 27, 2019 for sale of the 50% shareholding of the
defendants in the plaintiff no.6 as reduced into writing and as
recorded by the email dated March 28, 2019 of the defendant
no.2 inter alia by :
(i) executing, signing and attesting all necessary deeds and
documents necessary to transfer, assign and vest the fifty percent
shareholding of the defendants in the plaintiff no.6 in favour of
the plaintiffs or their nominees;
(ii) handing over original title deeds, documents and writings in
respect of the suit plot which are lying with the defendant no.2
and in the locker to be operated jointly by the defendant no.2
and the plaintiff no.2 to the plaintiffs.
(iii) doing or causing to be done all acts, deeds, matters and
things and to sign, execute and register all deeds, documents and
writings as may be necessary for the transfer of the said 50%
shares of the Agarwal Group to the plaintiff nos.1 to 5 and/or to
their nominees free of all claims of the defendants.
(iv) Tendering their resignation from Directorship of the plaintiff
no.6 company.
(C) That this Hon'ble Court be pleased to order and decree the
defendants to do or cause to be done all acts, deeds, matters and
things and to sign and execute all deeds, documents or writings
necessary under the supervision of this Hon'ble Court for the
purposes of the order of specific performance or to give effect to
the reliefs sought in terms of prayer (b) above.
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(D) That for the purposes aforesaid all inquiries be made, awards
be made, orders be passed, directions be given and accounts be
taken as this Hon'ble Court may deem just and proper in the facts
and circumstances of the case.
(E) In addition to and/or in the alternative to prayer clauses (B)
and (C) above, and only if this Hon'ble Court comes to the
conclusion that a decree of specific performance cannot be
granted, then this Hon'ble Court be pleased to order and decree
the Defendants to pay to the Plaintiffs the sum of Rs. 45.00
Crores or such higher amount including and not limited to
escalation in the project costs as may he determined by this
Hon'ble Court by way of recompense of the expenses incurred by
the Plaintiffs and/or by way of damager as per the Particulars of
the Plaintiffs Claim at Exhibit "J" to the Plaint with Interest on
such sums at the rate of 24% per annum from the date of the
Suit till payment or realization;
(F) That the Defendant Nos. 1 to 3, by themselves, their servants
and agents and all persons claiming by, through or under the
Defendant Nos. 1 to 3 and/or the Defendant Nos. 4 and 5,
through their Directors, partners and persons in control and
management of the business and affairs of the Defendant Nos. 4
and 5 be restrained by a permanent Injunction and order of this
Hon'ble Court from in any manner directly or indirectly (i)
allenating, encumbering or creating any third party rights in
respect of the 50% shareholding of the Defendants in the Plaintiff
No. 6 (ii) altering or changing the shareholding pattern or the
persons in management and control of the Defendant No. 4 or
the partners in the partnership of Defendant No. 5 to some third
parties (iii) carrying out or running a medical practice in the
name of Speciality Ear Nose Throat Hospital or epresenting that
the Defendant No. 2 is the purported Proprietor thereof or from
operating a bank account in the name of the Specialty Ear Nose
Throat Hospital as a proprietor thereof or from holding out to the
world at large that the assets and properties and the proposed
multispeciality hospital project of the Plaintiff No. 6 are singly
owned by the Defendant No.2 as proprietor thereof;
(G) That pending the final hearing and disposal of the Sult, the
Defendant Nos. 1 to 3, by themselves, their servants and agents
and all persons claiming by, through or under the Defendant Nos.
1 to 3 and/or the Defendant Nos. 4 and 5, through their
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Directors, partners and persons in control and management of
the business and affairs of the Defendant Nos. 4 and 5 be
restrained by a temporary injunction and order of this Hon'ble
Court from in any manner directly or indirectly (i) alienating,
encumbering or creating any third party rights in respect of the
50% shareholding of the Defendants in the Plaintiff No. 6 (ii)
altering or changing the shareholding pattern or the persons in
management and control of the Defendant No. 4 or the partners
in the partnership of Defendant No. 5 to some third parties (iii)
carrying out or running a medical practice in the name of
Speciality Ear Nose Throat Hospital or representing that the
Defendant No. 2 is the purported Proprietor thereof or from
operating a bank account in the name of the Specialty Ear Nose
Throat Hospital as a proprietor thereof or from holding out to the
world at large that the assets and properties and the proposed
multispeciality hospital project of the Plaintiff No. 6 are singly
owned by the Defendant No. 2 as proprietor thereof ;
(H) That pending the hearing and final disposal of the Sult, the
Defendants, by themselves, their servants and agents and/or
their directors and partners be ordered by an order and
injunction of this Hon'ble Court to:
(i) make their proportionate 50% contribution for all expenses
for security, outgoings, pending litigation and other costs
necessary to protect the property of the Plaintiff No. 6 situated at
"Hospital Plot AMG admeasuring 4897.40 square meters and
bearing CTS No. 827/C/1/20 situated at Dindoshi Malad, Taluka
Borivali, Mumbai Suburhan District;
(ii) to sign and deliver to the Maintiffs all mandates/cheques and
other documents in connection with the operation of the Bank
Account of the Plaintiff No. 6 Company with State Bank of India,
Tirupati Towers, Thakur Complex, Kandivall (East), Mumbal and
with Axis Bank Ltd., Thakur Village, Kandivall (East), Mumbai;
(iii) to sign and deliver to the Plaintiffs all required mandatory
forms and documents in order to complete all formalities in the
office of the Registrar of Companies/ Ministry of Corporate
Affairs, Income Tax Department and other statutory authorities
with respect to the day to day management of the business and
affairs of the Plaintiff No. 6;
(I) For ad-interim rellefs in terms of prayer [G] and (H) above;
(J) For costs of the suit;
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(J) For such other and further reliefs as the nature and
circumstances of the case may require."
(Emphasis supplied)
65. From a bare reading of the above prayers, it is quite clear that
the specific performance that was sought was only with respect to 50%
of shareholding of the Agarwals in the said company to be transferred
to the Kotharis. None of the prayers make any mention of the reverse
mechanism or the automatic purchase by the Agarwals of the shares of
the Kotharis in the said company. Although admittedly the Notice of
Motion had prayer seeking performance of the reverse mechanism,
however, by virtue of order dated 5 th August 2019 passed by the
consent of the Defendants in terms of prayer clauses (A) to (D), the
said issue seeking performance of reverse mechanism/automatic sale
by the Kotharis to the Agarwals was out of question.
66. The Hon'ble Supreme Court vide its judgment dated 21 st
February 2023 has held that the agreement / email dated 28 th March
2009 only concerns the sale of 50% share holding of the Defendants i.e.
Agarwal group. The relevant portion of paragraphs 13 and 21 of the
Hon'ble Supreme Court's decision is usefully quoted as under :
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"13. ....They are analogous to the terms of the agreement dated
28.03.2019, which allude only to the 'sale of the 50%
shareholding of the defendants' (i.e. of the Agarwals)...
21. ....This elucidation of the law is unexceptionable. It is
undeniable that an executing court can construe a decree if it is
ambiguous. However, as in the facts of the case herein, this
cannot result in additions (to the terms of the consent, embodied
in the email dated 28.03.2019) which were not agreed upon by
the parties, since the decree was drawn on by consent of both the
parties at admission stage itself...."
(emphasis supplied)
67. As can be seen, the Hon'ble Supreme Court specifically refers to
decree by consent of both parties. The consent decree was in terms of
prayer clauses (A) to (D) which refers only to the sale of 50%
shareholding of the Defendants i.e. Agarwals. There cannot be
addition to the terms of the consent embodied in the email dated 28 th
March 2019 which were agreed upon by the parties, since the decree
was by consent of both the parties at admission stage itself.
68. It has not been disputed by the Kotharis that the 120 th day, even
assuming the same commenced from the fresh timelines in the order
dated 5th August 2019 had already expired when the Kotharis had, in
their affidavit filed before the Hon'ble Supreme Court on 6 th September
2022, submitted that the Kotharis have always been and ready and
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willing to pay the balance amount in terms of the order and decree
dated 5th August 2019, and that therefore, for the Kotharis to now
invoke the automatic sale of the 50% shares of the Kotharis to the
Agarwals at their bid price of Rs.35 crores, in my view, would not be
tenable. The 5% amount, as submitted above, has not been forfeited
by the Agarwals nor they had the intention to do so, as has clearly been
set out in paragraph 21 of the affidavit in reply to the Interim
Application No.166 of 2019.
69. The contention with respect to the reverse mechanism / the
automatic buying back of the shares of Kotharis by the Agarwals was
also agitated before the Hon'ble Supreme Court by filing Review
Petitions and the said Review Petitions (Civil) no. 477-478 of 2023
were dismissed by an order dated 3 rd October 2023 after hearing the
matters. A perusal of the Review Petitions filed before the Hon'ble
Supreme Court seeking a review of the order dated 21 st February 2023
clearly indicates that the Kotharis have submitted that the Agarwals
insisted to be bought over having consistently declined to honour their
obligations to buy over the Kotharis as per Clause (4) of the email /
agreement dated 28th March 2019 despite repeated offers before the
Single Judge, the Division Bench and the Hon'ble Supreme Court.
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Relevant averments from the said Review Petitions are usefully quoted
as under :
"Para 2..... The Kothari further submit that the judgement under
review has restored the stalemate which existed between
Kotharis and Agarwals in as much as Agarwals have consistently
declined to honour their obligations to buy over Kotharis as per
Clause 4 of the email dated 28.03.2019 despite repeated offers
before the Id. Single Judge, Hon'ble Division Bench and this
Hon'ble Court on the contrary., Agarwal insist to be bought over
on terms and conditions which are more onerous than terms and
conditions on which Kotharis are agreeable to be bought over.
This stalemate in effect nullifies the decree in question on the
basis of interpretation thereof in judgement under review. The
petitioners submit there are thus sufficient reasons to review the
impugned judgement.
(F) Because the judgment under review failed to consider that
proof of the pudding is in eating and that Agarwals themselves
are not ready to fulfil the email dated 28/03/2019 as per their
interpretation and re-pay the amount of loan advanced by
Kothari to the company in addition to the agreed price of the
shareholding of Kotharis; this is relevant because the agreement
between the parties provides that if Kotharis failed to pay 50% of
the consideration within 45 days, agarwals were bound to
purchase the shareholding of Kotharis.
(K) Because the judgment under review has restored the
stalemate which existed between Kotharis and Agrawals
inasmuch as Agrawals have consistently declined to honour their
obligations to buy over Kotharis as per Clause 4 of the email
dated 28.3.2019 despite repeated offers before the learned Single
Judge, Hon'ble Division Bench and this Hon'ble Court. On the
contrary, Agrawals insist to be bought over on terms and
conditions which are more onerous than terms and conditions on
which Kotharis are agreeable to be bought over. This stalemate
in effect nullifies the decree in question on the basis of
interpretation thereof in judgment under review. The Petitioners
submit there are thus sufficient reasons to review the impugned
judgment."
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70. Having perused the orders of the learned Single Judge, the
Division Bench as well as the Hon'ble Supreme Court, I am afraid, I do
not find that any such offer has been made by the Kotharis to the
Agarwals. Therefore, whether or not the Kotharis advanced the
contention of the default/reverse mechanism before or after 21 st
February 2023 would not make any difference. Infact, even if the said
contention has been taken up by the Kotharis in the Execution
Application No.1041 of 2022 by amending the said Execution
Application even before the judgment and order dated 4 th January 2021
that would not make any difference in view of what has been held
above. In my view, the matter has been concluded and the issues
having attained finality, cannot be re-agitated.
71. Further, it has not been disputed, that in an affidavit dated 25th
November 2019, the Agarwal's had specifically disputed these
contentions and reiterated that performance was sought and granted
only with respect to the purchase of Agarwal group shares and
adjudicated in the nature of a consent decree. Therefore, there is no
question of any reverse mechanism / automatic sale to the Agarwals
after the suit has been decreed.
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72. As noted above, the Hon'ble Supreme Court dismissed the
Review Petitions filed by the Kotharis on 3 rd October 2023 after hearing
the parties. It is, therefore, clear that the specific performance granted
in the decree is only qua the shares of Agarwal group to be sold to the
Kotharis. The Kotharis are trying to add something into the decree by
way of the Execution Application which is not tenable. It is well settled
that an Executing Court cannot go beyond the order or decree under
execution, it gets jurisdiction only to execute the order only in
accordance with the procedure laid down under Order XXI of CPC as
held in Rameshwar Dass Gupta Vs. State of U.P. and Another (supra).
Paragraph 4 of the said decision is usefully quoted as under :
"4. It is well settled legal position that an executing
Court cannot travel beyond the order or decree under
execution. It gets jurisdiction only to execute the order in
accordance with the procedure laid down under Order 21,
CPC. In view of the fact that it is a money claim, what was to
be computed is the arrears of the salary, gratuity and pension
after computation of his promotional benefits in accordance
with the service law. That having been done and the court
having decided the entitlement of the decree-holder in a sum
of Rs.1,97,000/- and odd, the question that arises is whether
the executing Court could step out and grant a decree for
interest which was not part of the decree for execution on the
ground of delay in payment or for unreasonable stand taken
in execution ? In our view, the executing court has exceeded
its jurisdiction and the order is one without jurisdiction and is
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thereby a void order. It is true that the High Court normally
exercises its revisional jurisdiction under Section 115 CPC,
but once it is held that the executing court has exceeded its
jurisdiction, it is but the duty of the High Court to correct the
same. Therefore, we do not find any illegally in the order
passed by the High Court in interfering with and setting aside
the order directing payment of interest."
73. The Hon'ble Supreme Court has held that the decree in question
is not ambiguous and there is no need to go behind the decree and the
decree is to be determined by itself.
74. The order dated 5th August 2019 ex facie, does not address nor
grant the reverse / automatic sale mechanism. The Agarwals had not
consented to the reverse mechanism. Infact, considering the same was
not even a relief sought in the suit, the question of the Agarwals
consenting to a relief not sought would even otherwise not have arisen.
In Topanmal Chhotamal V. Kundomal Gangaram3 the Hon'ble Supreme
Court held that it is well settled principle that a Court executing a
decree cannot go behind the decree. Again in Meenakshi Saxena vs
ECGC Ltd.4 the Hon'ble Supreme Court has held that the whole purpose
of execution is to enforce the verdict of the Court. Executing Court
while executing the decree is only concerned with the execution part of
3 AIR 1960 SC 388
4 (2018) 7 SCC 471
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it and nothing else. The Court has to take the judgment on its face
value.
75. After passing the decree dated 5th August 2019, there were two
letters addressed by the Kotharis on 9th August 2019 and 21st August
2024. The Advocate for Kotharis addressed the aforesaid
communications upon the Advocate of Agarwals, wherein there is no
mention of reverse mechanism and/or purchase of Kotharis' shares by
Agarwals. Although the two letters are not denied but the Kotharis are
objecting to their reliance as the same have not been part of the
proceedings. In my view, even if the said letters are not considered,
that would not make any difference to the view expressed by this Court
with respect to the reverse mechanism/automatic sale.
76. The order dated 4th January 2021 and subsequent order of the
Division Bench was carried to Hon'ble Supreme Court and the Hon'ble
Supreme Court having specifically dealt with the decree pertaining to
sale of Agarwals' shares to Kotharis held that there cannot be made an
addition to terms of the consent, embodied in the email dated 28 th
March 2019 which were not agreed upon by the parties since the
decree was by consent of both the parties at the admission stage and
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therefore it is not open for the Kotharis to contend that the decree be
interpreted by adding something which was not agreed upon. Apart
from the order of the Hon'ble Supreme Court dated 21 st February 2023,
the grounds with respect to the reverse mechanism/automatic sale
have been taken up before Hon'ble Supreme Court in the Review
Petitions, heard and rejected and now it is not open for the Kotharis to
re-agitate and argue the same before the Court.
77. I also agree with the submission of Mr.Singh that the contention
that a decree has not been drawn up in terms of Order XXI Rule 31
read with Order XXI Rule 34 is in the teeth of the order dated 5th
August 2019 which specifically states in paragraph 5 that drawn up
decree is dispensed with.
78. With respect to the submission made by the Plaintiff referring to
paragraph 21 of affidavit dated 25 th November 2019, I agree with
Mr.Singh that in the entire affidavit and particularly in paragraphs 17,
19 and 20 quoted as under, the Agarwals have repeatedly said that it is
the Kotharis who have agreed to acquire shares of Agarwals and that
the decree is also for the sale of Agarwals' shares which is valid,
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subsisting and binding and that Plaintiff/Judgement Creditor has no
intention to go contrary to the decree :
"17. I say that in view thereof, it is also necessary to look into the
original execution application filed before this Hon'ble Court. I
say that even the original application filed before this Hon'ble
Court in clear terms shows the intentions of present judgment
creditors that they had agreed to acquire rights in respect of 50%
equity share of the company held by the Agarwal group on the
terms and conditions mentioned in the email.
19. I say that all those prayers are consequential prayers allowed
by the Hon'ble Court subject to original plaintiff complying with
their part of obligation as per the email referred and relied upon
by the plaintiff and at this stage, they can never be permitted to
revert back to the situation and say they wanted to go on behalf
of execution application and at the same time, they do not want
to comply with their obligation.
20. I say that the said decree is valid in substance and binding
upon the parties, as such, I have no intention to act contrary to
the said decree, as after the decree, I have made alternative
arrangements and require money to fulfill my commitments."
79. As can be seen, even till the SLP in the Hon'ble Supreme Court,
the entire understanding of the Kotharis was restricted to explaining as
to how they would purchase the shares of the Agarwals. The Kotharis
themselves understood and stated that the decree was granted in terms
of prayer clauses (A) to (D) of the plaint. It is not even their case that
the decree was on the basis of reliefs sought for in the Notice of
Motion. I, therefore, agree with Mr.Singh that even before the Hon'ble
Supreme Court, the contention of the Kotharis in the year 2022 i.e. well
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after the period of 120 days referred to in the email dated 28 th March
2019 had expired, was that they had been and are ready and willing to
pay the purchase price to the Agarwals. The contention of the Kotharis
that a reference in the consent order that the time mentioned in the
agreement begins from the date of the decree means that the reverse
mechanism was decreed is therefore not tenable. As also noted above,
the decree dated 5th August 2019 does not speak of the issue of reverse
mechanism / automatic sale to the Agarwals. The specific performance
that has been sought for and granted in the decree is only qua the
shares of the Agarwal group to be sold to the Kotharis. The decree
does not speak about Kotharis selling their 50% shares to Agarwals. It
cannot, therefore, be said that agreement dated 28 th March 2019 has to
be read or directed to be performed in part. The said issue has been
finally concluded by the order of the Hon'ble Supreme Court on 21 st
February 2023 and the dismissal of the Review Petitions on 3 rd October
2023 after hearing the parties in open Court. The issue, therefore,
having attained finality cannot be re-agitated in execution of the
consent decree dated 5th August 2019, as the Kotharis cannot add
something into the decree by way of an execution application. The
same is impermissible in law and the Executing Court cannot go
beyond the order or decree in execution.
501-EXA-1041-22-EXAL-139-20.doc
80. In the case of Rameshwar Dass Gupta Vs. State of U.P. and
Another (supra) the Hon'ble Supreme Court has in paragraph 4 clearly
observed that it is a well settled legal position that an Executing Court
cannot travel beyond the order or decree under execution and it gets
jurisdiction only to execute the order in accordance with the procedure
laid down under Order XXI of the CPC. In the said case, the Hon'ble
Supreme Court upheld the order of this Court in setting aside the order
directing payment of interest in the case of a decree which did not
award interest observing that the Executing Court cannot step out and
grant a decree for interest which was not part of the decree for
execution on the ground of delay in payment.
81. The order dated 5th August 2019 nowhere addresses or allows
the automatic sale nor had the Agarwals consented to the same. I
agree with Mr.Singh that considering that the same was not even a
relief sought for in the suit, the question of the Agarwals consenting to
the same could not even have arisen.
82. Mr.Madon has sought to argue that the specific performance of
the decree dated 5th August 2019 was to execute even the email
501-EXA-1041-22-EXAL-139-20.doc
agreement dated 28th March 2019 in its entirety i.e. including the
reverse mechanism / automatic sale to the Agarwals, in the event the
Kotharis failed to make the balance payment, as the timelines
mentioned in the agreement had been extended by paragraph 2 of the
decree. I am afraid, I am unable to accept the arguments of Mr.Madon,
as the extension of timelines were necessary even for the purchase by
the Kotharis, considering that payments had to be made. In the light of
the above submissions, this cannot be read as to imply something and
thereby adding to the consent decree. Moreover, as noted above, as
late as in 2022, the Kotharis have, in their counter affidavit filed before
the Hon'ble Supreme Court, submitted that they have been ready and
willing to pay the balance amount in terms of the order and decree
dated 5th August 2019, which is after the 120th day from the date of the
decree. Therefore, for Mr.Madon to, at this stage, contend that in view
of paragraph 2 of the decree, the reverse mechanism / automatic sale
from the Kotharis to the Agarwals for a consideration of Rs.35 crores
was effected, in my view, cannot be countenanced. Even the
submission on behalf of Mr.Madon that the 5% token amount had been
forfeited by the Agarwals, does not appear to be correct, in as much as,
in Mr.Madon's own submissions reproducing paragraph 21 of the reply
of the Agarwals, it has been clearly averred that although the Agarwals
501-EXA-1041-22-EXAL-139-20.doc
are entitled to forfeit the amount paid by them, however, they have no
intention to do so.
83. Although the Hon'ble Supreme Court has stated in paragraph 13
that the only issue for consideration is whether the sum of Rs.36.75
crores stipulated in the agreement by email dated 28 th March 2019 was
including of the loan amount of Rs.10,29,55,000/- or not, however, it
cannot be ignored that the Hon'ble Supreme Court has in paragraph 21
clearly observed that in the facts of this case, additions to the terms of
the consent embodied in the email dated 28 th March 2019, which were
not agreed upon by the parties, since the decree was drawn on by
consent of both the parties, at the admission stage itself. And
therefore, in my view, albeit the fact that the only issue for
consideration before the Hon'ble Supreme Court was whether the sum
of Rs.36.75 crores was inclusive of the loan amount of
Rs.10,29,55,000/- or not, an Executing Court can neither go beyond
the decree nor behind it and has to execute the decree in terms thereof.
Further, it also cannot be ignored that paragraph 2 and grounds (F)
and (K) in the Review Petitions where reverse mechanism/automatic
sale was taken up, have been dismissed, thereby rejecting the said
claim of the Kotharis.
501-EXA-1041-22-EXAL-139-20.doc
84. The reverse mechanism/automatic sale was neither prayed for in
the suit nor part of the consent order/decree under execution nor
accepted by the Hon'ble Supreme Court. Obviously, therefore, it cannot
be implied that the reverse mechanism/automatic sale has to be read as
part of the decree. Reading it otherwise would do violence to the order
of the Hon'ble Supreme Court and not the other way round. The Court
has to take the judgment on its face value. The Executing Court while
executing the decree is only concerned with the executing part of it and
nothing else. The whole purpose of execution is to ensure the verdict
of the Court is implemented. Therefore, the Executing Court cannot
read or imply an understanding of terms in an unambiguous decree. If
that is permitted, it would be never ending. It is in the interest of
justice that there should be finis litium that is there is an end to dispute
or litigation. Interest reipublicae ut sit finis litium - It is also in the
interest of the State that there should be an end to litigation. Therefore,
since the Hon'ble Supreme Court had clearly given its findings in the
order dated 21st February 2023, it would not matter that the dismissal
of the Review Petitions were without a speaking order. I am, therefore,
unable to accept the submissions by Mr.Madon.
501-EXA-1041-22-EXAL-139-20.doc
85. In my view, Mr.Madon's reliance upon the decision of the Calcutta
High Court in the case of Kartick Chandra Pal vs. Dibakar Bhattacharjya
(supra) is not of any assistance, in as much as, firstly the said decision
itself observes that the most important part of the decree is that portion
where the court directs the contract to be specifically performed. As noted
above, the prayers in the suit only sought specific performance of the
agreement arrived at on 27th March 2019 for sale of the 50% sharholding
of the Agarwals in the said company to the Kotharis and nothing more.
No doubt, details which follow in a contract for specific performance do
not, in any way, limit the jurisdiction of the Executing Court to the
particular steps which are mentioned in the decree but all such other
steps, which ought to be taken for giving full effect to the decree for
specific performance, are not only within the competence of the Court but
the Court is bound to assist the party to that extent. However, that is not
what is being sought for by the Kotharis here. What is being sought for is
the part of autoamatic sale that was not even sought for in the suit for
specific performance. The consent by the Agarwals with respect to prayer
clauses (A) to (D) was only with respect to the sale of 50% shares by the
Agarwals to the Kotharis. Therefore, in my view, the principle laid down
by the said decision of the Calcutta High Court would not apply to the
facts of this case.
501-EXA-1041-22-EXAL-139-20.doc
86. Ergo, in view of the above discussion, the Execution Application
(L) No. 139 of 2020 is hereby allowed as under :
(i) That against the deposit of all the document for transfer of 50%
shares in respect of the company known as Specialty Ear Nose
Throat Hospital Pvt. Ltd. and handing over the same to the
Respondents being the original Plaintiffs or deposit of the same
with the office of this Court, the Respondents being the
Judgment Debtors and being the original Plaintiffs be directed to
pay within a period of four weeks the balance sum of
Rs.34,91,25,000/- to the Applicants along with applicable
interest on delayed payment as per original schedule of payment.
(ii) Failing the above, liberty to the parties to take steps / initiate
proceedings as they may be advised in law.
87. The Execution Application 1041 of 2022, accordingly stands
dismissed.
88. Pending Interim Applications to accordingly stand disposed.
89. After the order is pronounced, Mr. Kanade, learned Counsel
appearing for the original Plaintiff seeks stay of the order for a period
of six weeks.
501-EXA-1041-22-EXAL-139-20.doc
90. Mr. Singh, learned Senior Counsel appearing for the original
Defendant opposes the request.
91. Considering that we are in execution, stay prayed for by Mr.
Kanade, learned Counsel for the Plaintiff is rejected.
(ABHAY AHUJA, J.)
Digitally
signed by
ARTI
ARTI VILAS
VILAS KHATATE
KHATATE Date:
2024.09.24
13:31:18
+0530
