*1* nms.2722.09.s.1022.07.1348.11.sxw kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2722 OF 2009 WITH NOTICE OF MOTION NO.3782 OF 2009 IN SUIT NO.1022 OF 2007 Hemant D. Shah and others. ..Plaintiffs -versus- Chittaranjan D. Shah and others. ..Defendants ............ Mr.T.N.Subramanian and Mr.Pradip Sancheti, Senior Advocates a/w Mr.V. Krishna, Mr.Riyaz I. Chagla i/b Khaitan & Company, for the Plaintiffs. Mr.S.U.Kamdar, Senior Advocate a/w Ms.Pooja Patil i/b Mr.Bipin Joshi, for the Defendant Nos.5 and 16. Mr.V.A.Thorat, Senior Advocate a/w Mr.Denzil D’Mello, for the Defendant Nos.1 to 4. Mr.Ashish Mehta a/w Mr.G.C.Mohanty, for the Defendant Nos.7 to 14, 18 and 19. Mr.N.H.Vakil i/e Mulla & Mulla, for the Defendant No.15. ............ CORAM : S.C.DHARMADHIKARI, J. Date : 11th October, 2011. P.C.: 1 Since common arguments are canvassed, both the Notice of Motions are disposed of by this common order. 2 The Notice of Motion No.2722/2009 is filed by the Defendant Nos.5 and 16 praying for dismissal of the present suit under Order VII Rule 11 (d) of the Code of Civil Procedure, 1908. 3 It is submitted in support of this motion by Mr.Kamdar, learned Senior Counsel, that the Defendant Nos.5 and 16 are seeking dismissal of the suit on the basis of the averments in the plaint itself. It is *2* nms.2722.09.s.1022.07.1348.11.sxw not necessary to refer either to the defence or other documents and pleadings. On reading of the plaint itself these Defendants will be able to demonstrate that the suit is barred by law. The statements in the plaint are sufficient to support this submission. 4 My attention is invited to the prayers in the plaint and it is submitted that the suit is filed for declaration that the Defendant Nos.13, 14, 18 and 19 which are companies and the Defendant Nos.7 to 12 being the associations of persons were at all material times nothing but an alter ego of CD Shah Group (Defendant Nos.1 to 6) and HD Shah Group (Plaintiffs) being jointly managed and controlled by them and therefore, are bound by the Memorandum of Understanding (MoU) dated 09.03.1994 (Exhibit-A to the plaint) and continue to be alter ego of both groups till the said MoU is implemented in its entirety. Mr.Kamdar submits that further part of the prayer clause (a) postulates that it be ordered and declared that an Award that may be passed in the pending arbitration for enforcement of claims under the MoU dated 09.03.1994 is binding and/or enforceable against the Defendant Nos.7 to 12, 13, 14, 18 and 19. It is submitted that the prayer clauses (b) to (f) are in furtherance and in pursuance of the declaration that is claimed in prayer clause (a). Therefore, if the prayer clause (a) is substance of the allegations in the plaint and reliefs claimed, then, that cannot be granted in the light of section 5 of the Arbitration and Conciliation Act, 1996. The Plaintiffs are seeking to enforce the claims which are referred to Arbitration and the award that may be made in pursuance thereof. They are seeking a declaration that the said award is binding and enforceable against the Defendant Nos.7 to 12, 13, 14, 18 and 19. Such relief without being part of the arbitration proceedings cannot be sought inasmuch as if such relief had been sought under Arbitration Act or otherwise, these contesting *3* nms.2722.09.s.1022.07.1348.11.sxw Defendants would have had an opportunity to resist the pleas in relation to the same. That relief could have been sought only by taking recourse to the provisions of Part-I of the Arbitration and Conciliation Act, 1996. It cannot be done by indirect or oblique method of filing of this suit. The mandate flowing from section 32 of the old Arbitration Act, 1940 and now crystallized in section 5 of the new Arbitration and Conciliation Act, 1996 reinforces the submission that the subject matter of the arbitration agreement and arbitration reference and the award made in such reference is out of the purview of a civil suit. Mr.Kamdar has invited my attention to certain paragraphs of the plaint and has submitted that by addition and by referring to some properties, there is no question of the claim being not covered by the arbitration proceedings. If the MoU dated 09.03.1994 and all terms, conditions and obligations of the parties thereunder, so also, the disputes in relation thereto, are subject matter of the pending arbitral reference, then, all the more the reliefs sought would be barred by the Arbitration and Conciliation Act, 1996. 5 Alternatively, the relief is barred by the Law of Limitation. My attention is invited to certain paragraphs of the plaint in Civil Suit No. 1421/1997 which was filed by the Plaintiffs. It is submitted that the very declaration and foundation of that declaration in the instant suit was a part of the reliefs claimed in the said suit. That suit was, therefore, filed, but it came to be disposed of by an order dated 09.03.2000. Now a civil suit to claim a declaration in relation to the rights flowing from the MoU of 1994, but in the year 2007 is clearly barred by the Law of Limitation. There is no statement in the plaint that the cause of action accrued on the basis of any event after institution of the suit in the year 1997. In such circumstances, the relief that is claimed in the present suit and the foundation of the present claim is barred by the Law of Limitation. The *4* nms.2722.09.s.1022.07.1348.11.sxw suit be, therefore, dismissed. 6 The argument of Mr.Kamdar has been adopted by Mr.Thorat, learned Senior Counsel appearing on behalf of other Defendants. Some of other Defendants have supported both the Senior Counsel. In the submission of Mr.Thorat, if what section 5 of the Arbitration and Conciliation Act, 1996 postulates is even a civil suit, then, a civil suit and particularly claiming a declaration would be barred in terms of the statutory provision. This is not a case where nothing de-hors the arbitration proceedings or reference thereto has been claimed. For all these reasons, it is submitted that the motions be allowed and the suit be dismissed. 7 Controverting these submissions, Mr.Subramanian, learned Senior Counsel appearing for the Plaintiffs, submits that the basis of the claim of the Plaintiffs is of ownership and title. The declaration is claimed because of denial of that right by the parties to the suit. In fact these very parties had stated before the Arbitral Tribunal and even on prior occasions before this Court that the subject matter at least in relation to some properties was out of the purview of the arbitral proceedings and reference. Therefore, it is not as if all claims arising out of or all rights and obligations pertaining to the MoU are subject matter of the pending arbitral reference. If any clarification is required that would be available on perusing the award which is now made by the learned Arbitrator (Justice D.R.Dhanuka (retd.) dated 12.07.2011. It is submitted that, at this stage, the Court cannot find out as to whether, the Plaintiffs would be entitled to any relief on the basis of the pleadings in the suit. For that the merits will have to be considered and gone into. On plain reading of the plaint averments, there is nothing therein which would indicate that either the suit is barred by section 5 of the Arbitration and Conciliation *5* nms.2722.09.s.1022.07.1348.11.sxw Act, 1996 or the Law of Limitation as claimed. Ultimately, if some part of the claim may not be granted as either being barred by law or the Plaintiffs being unable to substantiate and prove their allegations, but at this stage, the whole suit cannot be dismissed. For all these reasons, it is submitted that the motion be dismissed. 8 With the assistance of the learned Senior Counsel appearing for the parties, I have perused the plaint and some of the documents which are annexed thereto. As is well settled that the relief that is claimed on the basis of Order VII Rule 11(d) of the Code of Civil Procedure, 1908 is to be granted by taking into account the averments in the plaint and presuming that they are correct. It is also immaterial as to whether the points of defence or written statement is filed because the provision enables this Court to exercise its jurisdiction at any stage of the proceedings. 9 The plaint proceeds on the basis that there are two groups. The group of Plaintiffs is styled as “HD Shah Group” whereas the group of the Defendant Nos.1 to 6 is styled as “CD Shah Group”. The Defendant No.7 is an Association of Persons consisting of the Defendant No.1 and the Plaintiff No.2, so also, the Defendant No.14 as its members/ constituents. The Defendant No.8 is also an Association of Persons consisting of the Defendant Nos.1, 4 and 14 as its members/constituents. In cause title and in paragraph 1 of the plaint, there is elaborate description of the groups and associations of persons. Impleadment of the parties is also explained in paragraphs 3 to 5 of the plaint and it is stated that being family members, the Plaintiffs and Defendant Nos.1 to 6, namely, these groups have been joined in their personal and individual capacity, so also, in their capacity as members and constituents of associations of persons and also in their capacity as shareholders of the Defendant Nos.13, 14, 18 and 19 *6* nms.2722.09.s.1022.07.1348.11.sxw and trustees and beneficiaries of the private Trusts. While it is true that the plaint refers to the disputes and differences between the parties and the MoU dated 09.03.1994 being executed, but what has been pressed is that by virtue of this MoU the joint family businesses and concerns of the groups were partially distributed amongst two groups. Both groups treated the Defendant Nos.13, 14, 18 and 19 as nothing but an alter ego of the Plaintiffs Group and CD Shah Group. Thus, both HD Shah and CD Shah groups claimed to be jointly managing and controlling these entities. It is asserted that these groups are bound by the MoU. Various obligations under the MoU are referred to in the plaint and how the contesting groups acted upon the same partially has also been set out in the plaint. It is, therefore, stated that the Defendant No.1 by various letters referred to the MoU and admitted that CD Shah Group was liable to pay a sum of Rs.20 crores to the Plaintiffs and further claimed that the joint family entities went to their share under the MoU. Letters to that effect are referred to. Then there is reference to 5th and 6th floor premises in paragraph 14 onwards. 10 The plaint then asserts that HD Shah and CD Shah Groups are members, shareholders, constituents, trustees and beneficiaries of the entities which have been joined as Defendant Nos.7 to 12 and 14. The groups own, control and manage the said entities in equal proportions. As there is dispute in these groups, the Defendant Nos.7 to 12 and 14 are not in a position to take proper and effective decision and as such the present suit is filed on behalf of the entities who are Defendant Nos.7 to 12 and 14 inasmuch as the Plaintiffs are entitled to 50% membership stake in the associations of persons and the Plaintiffs also hold 50% equity share capital of the Defendant No.14 which also in turn is the constituent/member of the Associations of Persons. There are several *7* nms.2722.09.s.1022.07.1348.11.sxw allegations made with regard to the acts of CD Shah Group and then there is reference to one Samir Trust which is a private trust. It is stated that this Trust at the relevant point of time was shareholder/ member of the Defendant No.16 in respect of 5th and 6th floor premises in Manish Commercial Centre. This trust was dissolved and the affairs thereof were transferred and vested in the Plaintiff No.3 who became entitled to all properties of the said Samir Trust and that is how the Plaintiff No.3 stepped into the shoes of the said Trust. Then there is reference to the another private trust, namely, Vipul Trust and it is claimed that the Plaintiff No.4 stepped into the shoes of this private trust, namely, Vipul Trust which also stands dissolved. 11 There is narration of certain events of the year 1999-2001 and thereafter, there is reference to the civil Suit No.1421/1997. However, what is material to note is that the Plaintiffs have stated that one contempt petition was disposed of by this Court subsequently. There is reference to the proceedings before the Debts Recovery Tribunal and that before the learned Arbitrator. The Plaintiffs stated in paragraph 32 of the plaint that they had filed an arbitration petition because the Defendant No.15 expressed its desire to vacate the premises in Manish Commercial Centre and CD Shah Group was making attempt to take possession of the premises to the exclusion of HD Shah Group. There was correspondence exchanged with the Tatas and they stated that they will handover possession to CD Shah Group. Since it was apprehended that the Defendant Nos.1 to 6 were illegally trying to take control and possession of 5th and 6th floor premises and entering into various transactions with other entities, that the Plaintiffs sought certain reliefs by filing Arbitration Petition No.452/2006. However, there was an affidavit filed by the Defendant Nos.1 to 6 and they contended that the Defendant Nos.7 to 12 *8* nms.2722.09.s.1022.07.1348.11.sxw and 14 herein were not parties to the said MoU and to the arbitration proceedings and therefore, no orders could be passed in the application which was moved by the Plaintiffs under section 9 of the Arbitration and Conciliation Act, 1996. These allegations and contents of the affidavit have been referred to extensively in the plaint and therefore, it is contended that in view of the stand adopted by the Defendant Nos.1 to 6 that the Defendant Nos.7 to 12 and 14 are independent individual entities and are not subject matter of the MoU and thus, not amenable to the arbitration proceedings, that the instant suit is filed by the Plaintiffs. The Plaintiffs, therefore, in the subsequent paragraphs have also alleged as to how CD Shah Group illegally took charge and control of the Defendant Nos.7 to 12, 14, 18 and 19. The allegations in relation thereto are to be found in paragraphs 37 to 42 of the plaint. It is in these circumstances that the declaration is claimed and that is with regard to the premises at Manish Commercial Centre. Subsequently, there are allegations in relation to the Defendant No.13 and how it is alter ego of CD Shah and HD Shah groups. These averments are to be found in paragraph 53 onwards. There are certain references to the proceedings before the Debts Recovery Tribunal and to my mind, they need not be referred to in great detail. Suffice it to show what the Plaintiffs have alleged is that Manish Commercial Centre is wholly owned by CD Shah and HD Shah either by themselves or through medium of trusts or closely held companies and formed a part and/or subject matter of the said MoU. Paragraph 54 of the plaint makes extensive reference to how this entity belongs to the groups. There is also reference to certain other entities with which both groups are concerned and it is claimed that under the MoU, CD Shah Group was liable to pay liabilities of all groups which were coming to HD Shah Group including the Defendant No.18. How those claims were not honoured and *9* nms.2722.09.s.1022.07.1348.11.sxw how legal proceedings in relation thereto came to be initiated and orders therein passed is then referred to. There are subsequent developments post institution of the suit and the allegations are made of siphoning of funds against CD Shah Group. It is in these circumstances that the Plaintiffs allege that they are claiming declaration that the legal entities referred by them are nothing but an alter ego of the groups being jointly managed and controlled and therefore, they are bound by the MoU. 12 Since the disputes between both groups and the subject matter of the arbitration and outcome of the arbitration would also bind these entities and these entities are being claimed as separate having distinct legal identity, that the permanent injunction in terms of prayer clauses (b) to (h) is claimed. 13 Upon perusal of the plaint allegations, I am not in agreement with the learned Senior Counsel appearing for the Defendants who have moved this Notice of Motion that the instant suit is barred by law. The reference made by them to section 5 of the Arbitration and Conciliation Act, 1996 is rather misplaced in this case. The Arbitration and Conciliation Act, 1996 provides for reference to the arbitration by the parties and rather encourages it and that is how notwithstanding anything contained in any other law, in the matters governed by Part-I, no judicial authority can interfere except so provided by the Part. Therefore, sanctity of the arbitration and importance attached to the same in the light of the new Act is emphasized in this provision. Therefore, the emphasis thereon must be seen in the light of the arbitral reference and the award. The prayer that is being pressed into service, namely, prayer clause (a) in the present plaint, cannot be seen in isolation. If the entire plaint is perused together with the reliefs, it is clear that the substance of the Plaintiffs’ case is that the entities be declared as a part of the group and part of the MoU *10* nms.2722.09.s.1022.07.1348.11.sxw and that is the declaration that they are claiming. It is only if they succeed in getting that declaration that these entities to whom reference is made in prayer clause (a) would be covered by the arbitral reference and the award. Unless and until that is determined, there is no question of these entities joining or becoming a part of the arbitral reference. Therefore, Mr.Subramanian is right in his contention that the substance of the plaint and allegations therein must be seen. If that is seen, there is no question of the suit being barred by section 5 of the Arbitration and Conciliation Act, 1996 and particularly because the Plaintiffs claim a declaration with regard to the status of these entities and their position in terms of the clauses and reciprocal obligations of the MoU. For that to be determined individually, there is no doubt in my mind, that a civil suit is the only remedy. Therefore, the decisions on which reliance is placed by Mr.Kamdar do no assist the Defendant Nos.5 and 16 in any manner. The decisions have been rendered by the Honourable Supreme Court taking into account the fact that the parties before the Supreme Court sought intervention of the judicial authority in the matters which were squarely governed by Part-I of the Arbitration and Conciliation Act, 1996. Therefore, the Honourable Supreme Court emphasized that for such matters, recourse to the Arbitration and Conciliation Act, 1996 and the remedies provided therein is only permissible. No civil suit or even a Writ Petition can be filed when the disputes and matters are governed by the part in question. If such being the fact situation, the decisions of the Supreme Court relied upon, are of no assistance. 14 Equally, the second contention that the suit claim is barred by the Law of Limitation need not detain me, at this stage. As is well settled that limitation is a mixed question of fact and law. It is not possible to conclusively hold, at this stage, that the suit is barred by the Law of *11* nms.2722.09.s.1022.07.1348.11.sxw Limitation and particularly when there is reference to the suit of 1997 and the events thereafter. If in relation to some of the properties, rival group stated that the entities have distinct identity and they are not forming part of the understanding vide MoU, then, the Plaintiffs approached this Court and were constrained to seek the declaration, whether, that declaration and relief that is claimed in the earlier suit is one and same and therefore, the claim is barred by the Law of Limitation is a matter which cannot be conclusively decided on the reading of the plaint allegations. In fact, prima facie, reading of the plaint indicates that the Plaintiffs have proceeded on the basis that the rights in relation to these entities could have been claimed only after the events and developments post institution of earlier suit. Whether their allegations are correct or position is to the contrary can only be determined at the trial. At the most, the allegations in the plaint and contrary assertions in the Written Statement may give rise to a issue of the claim being barred by limitation and therefore, the same may have to be framed at the trial of the suit. Suffice it to note that at this stage, it is not possible to determine and hold that the claim of the Plaintiffs is barred by limitation. 15 As a result of the above discussion, both Notice of Motions fail and they are dismissed, but without any order as to costs. (S.C. Dharmadhikari, J) *12* nms.2722.09.s.1022.07.1348.11.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.1348 OF 2007 IN SUIT NO.1022 OF 2007 Hemant D. Shah and others. ..Plaintiffs -versus- Chittaranjan D. Shah and others. ..Defendants ............ Mr.T.N.Subramanian and Mr.Pradip Sancheti, Senior Advocates a/w Mr.V. Krishna, Mr.Riyaz I. Chagla i/b Khaitan & Company, for the Plaintiffs. Mr.S.U.Kamdar, Senior Advocate a/w Ms.Pooja Patil i/b Mr.Bipin Joshi, for the Defendant Nos.5 and 16. Mr.V.A.Thorat, Senior Advocate a/w Mr.Denzil D’Mello, for the Defendant Nos.1 to 4. Mr.Ashish Mehta a/w Mr.G.C.Mohanty, for the Defendant Nos.7 to 14, 18 and 19. Mr.N.H.Vakil i/e Mulla & Mulla, for the Defendant No.15. ............ CORAM : S.C.DHARMADHIKARI, J. Date : 11th October, 2011. P.C.: 1 Mr.Subramanian, learned Senior Counsel appearing for the Plaintiffs in support of the Notice of Motion for interim reliefs, submits that as the Notice of Motion Nos.2722/2009 and 3782/2009 filed by the contesting Defendants for dismissal of the suit under Order VII Rule 11 of the Code of Civil Procedure have been dismissed today by the order made separately, the Plaintiffs are pressing for urgent ad-interim relief in this Notice of Motion and particularly of appointment of the Court Receiver, High Court, Bombay in relation to the premises, namely, 5th floor of *13* nms.2722.09.s.1022.07.1348.11.sxw Manish Commercial Centre, Worli. 2 Mr.Kamdar, learned Senior Counsel appearing for the Defendant Nos.5 and 16, submits that they would like to challenge the order passed today dismissing the Notice of Motion No.2722/2009 in a higher court, until then no order be made and particularly of appointment of the Court Receiver as desired and sought by the Plaintiffs. Mr.Kamdar submits that without prejudice to the rights and contentions of the Defendant No.5, he is ready and willing to make a statement that the Defendant No.5 would maintain status-quo as of today in relation to the premises on 5th floor of the said building. On instructions, he makes a statement that one Sachin Trust is in possession of 5th floor and the Defendant Nos.1 to 4 are trustees of the said Sachin Trust as per the averments in the plaint itself. 3 Mr.Subramanian submits that this statement would not protect the Plaintiffs because there are further affidavits which have been filed and particularly going by the contents of the affidavit dated 23.09.2011 of the Plaintiffs and reply thereto by the Defendant No.1 filed on 05.10.2011, so also, the affidavit of the Defendant No.5 in reply to the Plaintiffs’ additional affidavit tendered today, it is just and convenient to appoint the Court Receiver as misleading statements are made. If Tatas are stated to be in possession of the premises and their affidavit filed on 06th January, 2011 indicates that they could not handover possession because of the internal dispute between lessors, then, as to