1 appeal 855.03 gr..sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 855 of 2003 IN NOTICE OF MOTION NO. 534 OF 2002 IN SUIT NO. 509 of 2001 WITH NOTICE OF MOTION NO. 1308 of 2005 NOTICE OF MOTION NO. 3956 of 2005 NOTICE OF MOTION NO.4118 OF 2007 NOTICE OF MOTION NO. 1973 of 2008 NOTICE OF MOTION NO.1418 of 2008 Messer Holdings Limited, having their office at 53, Friends Colony(E), New Delhi 110014. Appellants (orig. defendant no.4) v/s. 1. Shyam Madanmohan Ruia, of Mumbai Indian Inhabitant residing at 96, L. Jagmohandas Marg, Mumbai 400 006. 2. Ruia & Company, a private limited company having its registered office at Eucharistic Congress Building, 8th floor, 5, Convent Street, Colaba, Mumbai – 400 001. 3. Shamun Pvt. Ltd. a private limited company having its registered office at Eucharistic Congress Building, 8th floor, 2 appeal 855.03 gr..sxw 5, Convent Street, Colaba, Mumbai – 400 001. 4. Mr. Ramnarain Pvt. Ltd., a private limited company having its registered office at Eucharistic Congress Building, 8th floor, 5, Convent Street, Colaba, Mumbai – 400 001. 5. Smt. Chandra Shyam Ruia, of Bombay Indian inhabitant residing at 96, L. Jagmohandas Marg, Mumbai 400 006. 6. Smt. Uma Maharajsingh Mehta, of Mumbai Indian inhabitant residing at 26, Navrang Gopalrao Deshmukh Marg, Mumbai – 400 020. 7. Tya P.P. Cape Pvt. Ltd., a private limited company having its registered office at A/30, Nanddham Industries Estate, Marol, Maroshi Road, Andheri East, Mumbai- 400 059. 8. Smt. (Dr.) Nandini Atul Nathwani, of Mumbai Indian inhabitant residing at 8-A, Jeevan, Nepean sea Road, Mumbai – 400 006. ...Respondents 1-8 (Orig. Plaintiffs) 9. Messer Griesheim Gmbh, having its registered office at Frankfurt Airport Centre, 1,C9, D 60547, Frankfurt an Main Germany and its sale office at 6th floor, Commercial Tower, Le Meridien, Windsor Place, 3 appeal 855.03 gr..sxw New Delhi – 110 001. 10. Bombay Oxygen Corporation Limited, a public limited company registered under the Companies Act, 1956 and having its registered office at Lal Bahadur Shastri Marg, Mulund West, Mumbai 400 080. 11. Goyal MG Gases (P) Limited a company duly registered under the Companies Act, 1956 and having its registered office at 53, Friends Colony(E) New Delhi 110 065. ...Respondents (orig. defendants 1, 2 & 3) ALONGWITH APPEAL NO. 840 of 2003 IN NOTICE OF MOTION NO. 3230 of 2000 IN SUIT NO. 2499 OF 1999 WITH NOTICE OF MOTION NO. 29 of 2006 NOTICE OF MOTION NO. 3112 of 2003 ALONGWITH APPEAL NO. 841 of 2003 IN NOTICE OF MOTION NO. 392 of 2001 IN SUIT NO. 509 of 2001 WITH NOTICE OF MOTION NO. 3113 of 2003 4 appeal 855.03 gr..sxw ALONGWITH APPEAL NO. 857 of 2003 IN NOTICE OF MOTION NO.1231 of 2002 IN SUIT NO. 2499 OF 1999 WITH NOTICE OF MOTION NO. 3115 of 2003 Goyal MG Gases (P) Limited a company duly registered under the Companies Act, 1956 and having its registered office at 53, Friends Colony East New Delhi – 110 065. ....Appellants (org. defendant no.3) v/s. 1. Shyam Madanmohan Ruia, of Mumbai Indian Inhabitant residing at 96, L. Jagmohandas Marg, Mumbai 400 006. 2. Ruia & Company, a private limited company having its registered office at Eucharistic Congress Building, 8th floor, 5, Convent Street, Colaba, Mumbai – 400 001. 3. Shamun Pvt. Ltd. a private limited company having its registered office at Eucharistic Congress Building, 8th floor, 5, Convent Street, Colaba, Mumbai – 400 001. 4. Mr. Ramnarain Pvt. Ltd., a private limited company having its registered office at 5 appeal 855.03 gr..sxw Eucharistic Congress Building, 8th floor, 5, Convent Street, Colaba, Mumbai – 400 001. 5. Smt. Chandra Shyam Ruia, of Bombay Indian inhabitant residing at 96, L. Jagmohandas Marg, Mumbai 400 006. 6. Smt. Uma Maharajsingh Mehta, of Mumbai Indian inhabitant residing at 26, Navrang Gopalrao Deshmukh Marg, Mumbai – 400 020. 7. Tya P.P. Cape Pvt. Ltd., a private limited company having its registered office at A/30, Nanddham Industries Estate, Marol, Maroshi Road, Andheri East, Mumbai- 400 059. 8. Smt. (Dr.) Nandini Atul Nathwani, of Mumbai Indian inhabitant residing at 8-A, Jeevan, Nepean sea Road, Mumbai – 400 006. ...Respondents 1-8 (Orig. Plaintiffs) 9. Messer Griesheim Gmbh, having its registered office at Frankfurt Airport Centre, 1,C9, D 60547, Frankfurt an Main Germany and its sale office at 6th floor, Commercial Tower, Le Meridien, Windsor Place, New Delhi – 110 001. 10. Bombay Oxygen Corporation Limited, a public limited company registered under the Companies Act, 1956 and having its registered office at 6 appeal 855.03 gr..sxw Lal Bahadur Shastri Marg, Mulund West, Mumbai 400 080. 11. Messer Holdings Limited, having their office at c/o. Goyal MG Gases Limited, 48, Jangpura, A-4, Mathura Road, New Delhi – 110 014. ....Respondents (orig. defendants 1, 2 & 4) CORAM: A.M.KHANWILKAR AND A.A.SAYED, JJ. JUDGMENT RESERVED ON : JUNE 30, 2010. JUDGMENT PRONOUNCED ON : SEPTEMBER 01, 2010. JUDGMENT : (Per A.M.KHANWILKAR, J.) : Considering the multiple proceedings resorted to by the parties to the two suits, for the sake of convenience, we would refer to them as per the description of the parties given in the suits. 2. This common Judgment will dispose off all the above proceedings between the parties, before us, except Notice of Motion Nos. 2511/2008 and 2512/2008. The above four Appeals have been filed against the common Judgment and order passed by the Learned Single Judge of this Court dated 26th March, 2003 and clarified on 2nd May, 2003 while 7 appeal 855.03 gr..sxw disposing of all the Notice of Motions in the two suits. The Appeals, however, take exception to the order passed in Notice of Motion Nos. 3230/2000, 392/2001, 534/2002 and 1231 of 2002. 3. Appeal No. 840/2003 is filed by the defendant no.3 against the order in Notice of Motion No. 3230/2000 in Suit no. 2499/99. The Appeal No. 841/2003 is also filed by the defendant no. 3, but against the order in Notice of Motion No. 392/2001 in Suit No. 509/2001. Appeal No. 855/2003 is filed by defendant no.4 against the decision in Notice of Motion No. 534/2002 in Suit No. 509/2001. Appeal No. 857/2003 is filed by defendant no.3 against the decision in Notice of Motion No. 1231/2002 in Suit No. 2499/99. We would for the sake of convenience reproduce the reliefs claimed in the said four Notice of Motions, which is the subject matter of controversy before us in the four appeals. The same reads thus: N/M NO.3230/2000 in Suit No. 2499/1999 (filed on 15/11/2000) “(a) that this Hon’ble Court may be pleased to grant leave to Defendant No.3 to act pursuant to implement and enforce the consent Arbitral Award dated 21.9.2000. (b) ad-interim relief in terms of prayer (a) above; (c) for costs; (d) For such other and further relies as the nature and 8 appeal 855.03 gr..sxw circumstances of the case may require.” N/M NO.392/2001 in Suit No. 509/2001 (filed on 15/02/2001) “(a) that pending the hearing and final disposal of the suit, the Defendants be restrained from transferring and/or registering and/or taking any steps to transfer and/or register the said 75,001 shares in the name of any person or persons, firm or body corporate including the 1st and/or 3rd and/or 4th defendants without the consent of the plaintiffs; b) that pending the hearing and final disposal of this suit defendant No.1, 3 and 4 be restrained by an interim order and injunction of this Hon’ble Court from: i) exercising any rights, including as beneficial owner, in, to, upon, or in respect of the said 75,001 shares; ii) acting pursuant to, and or taking any steps in furtherance of the said Agreement dated 17th February 2000 and the said Consent Award dated 21st September 2000; c) for ad-interim reliefs in terms of prayers (a) and (b) above; d) for costs; e) for such further and other reliefs as the nature and circumstances of the case may require.” N/M NO.534 OF 2002 in Suit No. 509/2001 (filed on 21/02/2002) “(a) That pending the hearing and final disposal of the above suit, this Hon’ble Court may be pleased to appoint Administrator and/or a Board of Directors of Defendant No.2 having representation from the Plaintiffs and Defendant No.4 with an independent Chairman. (b) That pending the hearing and final disposal of the above Suit, Court Receiver, High Court, Bombay or some other fit and proper person be appointed as Receiver of Air Separation Plant belonging to the 2nd Defendant company installed at Mukund Ltd. at Kalwa, Thane Dist. with all powers under Order 40 Rule 1 of CPC 1908. 9 appeal 855.03 gr..sxw (c) That pending the hearing and final disposal of the Suit, the 2nd Defendant be restrained by an order and injunction of this Hon’ble Court from selling, disposing of, encumbering or creating third party interest in its assets and properties including the Air Separation Plant installed at the factory of Mukund Ltd. at Kalwa. (d) That pending the hearing and final disposal of the suit this Hon’ble Court may be pleased to appoint independent Auditor from the panel of this Hon’ble Court to audit the books of accounts of the 2nd Defendant company and to submit his report to this Hon’ble Court. (e) That pending the hearing and final disposal of the suit Defendant No.2 be restrained by an order and injunction of this Hon’ble Court from entering into an settlement and/or compromise or agree to pay or admit or acknowledge its liability in any proceedings including arbitral proceedings with Mukund Ltd. without the leave of this Hon’ble Court. (f) For ad-interim reliefs in terms of Prayers (a), (b), (c), (d) & (e) above. (g) For costs of this Notice of Motion. (h) For such other order and reliefs as this Hon’ble Court deems fit and proper.” N/M NO.1231/2002 in Suit No. 2499/1999 (filed on 24/04/2002) “(a) that order dated 29.2.2000 passed by His Lordship Mr.Justice D.K.Deshmukh on Notice of Motion No.1804/99 in the above Suit be set aside and/or varied or modified; (b) that pending the hearing and final disposal of the above suit order dated 29.2.2000 passed by His Lordship Mr.Justice D.K.Deshmukh on Notice of Motion No.1804 of 1999 in the above suit stayed; (c) for ad-interim relief in terms of prayer (b) above; (d) for costs of this Notice of Motion; 10 appeal 855.03 gr..sxw (e) for such other order and reliefs as this Hon’ble Court deems fit and proper.” 4. Briefly stated, the Plaintiffs have major shareholding in Bombay Oxygen Ltd.-defendant no.2. They are in the control of management of defendant no.2. The defendant No.2 is a public limited company whose shares are listed on the Bombay Stock Exchange. The defendant No. 2 company is engaged in the business of manufacturing and distributing industrial gases. The dispute pertains to the control of 75001 shares of defendant no.2 which represents its major shareholding. By Share Purchase Agreement (hereinafter referred to as SPA, for the sake of brevity) dated 23rd June, 1997, the plaintiffs agreed to divest its major control in defendant no.2 in favour of defendant no.1. The defendant no. 1 is a Germany company and is engaged in the business of supplying industrial gases. At the relevant time, the defendant no.1 was looking for business opportunities and/or collaborations in India. By the said SPA dated 23rd June, 1997, the plaintiffs agreed to sell to the defendant no.1 45001 shares of defendant no.2 company held by them and in addition allowing them to purchase 30,000 shares from the public making an aggregate of 75001 shares equivalent to 50% + 1 share of defendant no.2 11 appeal 855.03 gr..sxw company. As per the said SPA as agreed between the plaintiffs and defendant no.1, the defendant no.1 made application to Foreign Investment Promotion Board (hereinafter referred to as FIPB for the sake of brevity) for allowing them to invest in 75001 shares of defendant no.2 company independently. 5. As a matter of fact before executing the said SPA dated 23rd June, 1997, the defendant no.1 had already entered into Share Purchase and Cooperation Agreement with defendant no.3 company on 12th May, 1995. This fact was not disclosed to the plaintiffs before execution of said SPA dated 23rd June, 1997 with the plaintiffs. The defendant no. 3 is an Indian company engaged in the business of industrial gases. Notably, the defendant no.3 is a competitor in the business conducted by defendant no. 2 company. 6. On the other hand, according to defendant no.3, the defendant no.1 before entering into the said SPA Agreement dated 23rd June, 1997 with the plaintiffs, did not make disclosure thereof to it, which they were obliged to, considering the terms agreed upon between the defendant no. 1 and defendant no.3, as per the agreement dated 12th May, 1995. The 12 appeal 855.03 gr..sxw defendant no. 3 came to know of this design of the defendant no.1 after the public announcement was issued by the defendant no. 1 informing the public that it has agreed to acquire 45001 equity shares of Rs. 100/- each for a price of Rs. 300/- per share representing 30% of the equity shares of defendant no.2. The defendant no.3 initially lodged its protest with the defendant no.1 and eventually filed suit before the Delhi High Court complaining about the breach committed by the defendant no.1 and in particular arriving at an arrangement with the plaintiffs which had the effect of violating the non-competing clause contained in the agreement dated 12th May, 1995 executed in its favour by the defendant no.1. In addition, it was the case of defendant no.3 that the arrangement agreed upon by the defendant no.1 with the plaintiffs was in violation of the governing laws. At the instance of defendant no.3, the Division Bench of the Delhi High Court restrained the defendant no.1 from acquiring shares of the defendant no.2 company in breach of the agreement dated 12th May, 1995. The said injunction was challenged by defendant no.1 before the Apex Court. In the said Appeal, the parties agreed for making reference to Arbitrator to decide the matter relating to ownership and registration of the shares of defendant no.2 to be obtained by the defendant no.1 in terms of the said SPA dated 23rd June, 1997 between the defendant no.1 13 appeal 855.03 gr..sxw and the plaintiffs. Until such time the injunction granted by the Division Bench was ordered to be continued. The Apex Court, however, permitted the defendant no.1 to make payment to the public in relation to the 30,000 shares to be purchased by it as per the arrangement agreed between the defendant no.1 and the plaintiffs in terms of SPA dated 23rd June, 1997. 7. The plaintiffs on coming to know of the said arrangement immediately rushed to the Apex Court by way of intervention application. The Apex Court clarified that the arbitration proceedings between defendant no.3 and defendant no.1 and the decision therein will not come in the way of the plaintiffs to pursue their own remedy. As a result the plaintiffs have filed suit in this Court being Suit No. 2499/1999. The reliefs claimed in the said suit by the plaintiffs as amended read thus:- “(a) (i) For a declaration that the acquisition of the said 30,000 shares pursuant to the public offer is illegal, null and void ab-initio and of no legal effect whatsoever. (ii) For a permanent order and injunction restraining the Defendant from exercising any rights in respect of the said 30,000 shares including and in particular voting rights. (b) (i) For a declaration that the said agreement dated 23rd June, 1997 (exhibit B hereto) stands validity terminated and/or avoided; 14 appeal 855.03 gr..sxw (ii) that the 1st Defendant be ordered and decreed to deliver/return to the respective Plaintiffs the said 45,001 shares together with all accretions thereto from 23rd June, 1997 on such terms as this Hon’ble Court directs; (iii) for the purpose aforesaid the 1st Defendant be ordered and decreed to do and perform all acts, deeds, matters, and things and to execute all documents, deeds and writings in furtherance thereof. (iv) for a permanent order and injunction restraining the Defendant from transferring and/or registering and/or taking any steps to transfer and/or register the said firm or body corporate including the 1st and/or 3rd and/or 4th Defendant without the consent of the Plaintiffs. (v) for a permanent order and injunction restraining Defendant No.1, 3 and/or 4 from exercising any rights, including as beneficial owner, in, to, upon on in respect of the said 75,001 shares. (a)1(i) “In the alternative and in the event of prayer (b) not being granted”, that it be declared that the negative covenant contained in clause 6.1 of the agreement dated 23rd June 1997 being Ex.`B’ hereto is binding on the Defendant; (a)1(ii)(b) that the Defendant by themselves their agents and servants be restrained by a perpetual order and injunction of this Hon’ble Court from (i) committing breach of clause 6.1, of the Agreement dated 23rd June, 1997 being Ex.`B’ hereto; (ii) transferring or selling or alienating the legal and/or beneficial interest in the shares of Defendant No.2 including those mentioned in Ex.`A’ hereto without first offering the same to the Plaintiffs in terms of Clause 6.1 of the Share Purchase dated 23rd June, 1997 being Ex.`B’ hereto. (iii) obtaining any award, decree order from any forum or court in violation of clause 6.1 of the Share Purchase Agreement dated 23rd June, 1997 being Ex.`B’ hereto. (iv) making any claim before the Arbitrators or any court which if granted will amount to a breach or violation of the provisions of Clause 6.1 of the said Share Purchase 15 appeal 855.03 gr..sxw Agreement dated 23rd June, 1997 being Ex.`B’ hereto; (v) procuring any breach of the provisions of clause 6.1 of the said Share Purchase Agreement dated 23rd June, 1997 being Ex.`B’ hereto; (b1) (a) In the alternative and in the event of prayer (b) not being granted and”. In the event of it being held that the said Agreement is void Defendant No.1 be ordered and decreed to deliver/return to the respective Plaintiffs the said 45001 shares together with all accretions thereto from 23rd June 1977 on such terms as this Hon'ble Court may direct. (b) For the purpose aforesaid Defendant No.1 be ordered and decreed to do and perform all acts, deeds, matters and things and to execute all documents, deeds and writings in furtherance thereof. (c) that pending the hearing and final disposal of the suit Defendant Nos.1, 3 and 4 be restrained by an order of injunction of this Hon’ble Court from: (i) committing breach of clause 6.1 of the Agreement dated 23rd June, 1997 being Ex.`E’ hereto; (ii) transferring or selling of alienating the legal and/or beneficial interest in the shares of Defendant No.2 including those mentioned in Ex.`A’ hereto without first offering the same to the Plaintiffs in terms of Clause 6.1 of the Share Purchase Agreement dated 23rd June, 1997. Being Ex.`B’ hereto. (iii) Obtaining any award, decree from any forum or court in violation of clause 6.1 of the Share Purchase Agreement dated 23rd June 1997 being Ex.`B’ hereto. (iv) Making any claim before the Arbitrators or any court which if granted will amount to a breach or violation of the provisions of Clause 6.1 of the said Share Purchase Agreement dated 23rd June, 1997 being Ex.`B’ hereto; (v) procuring any breach of the provisions of Clause 6.1 of the said Shares Purchase Agreement dated 23 June, 1997 being Ex.`B’ hereto. (d) that pending the hearing and final disposal of the suit Defendant No.2 herein be restrained by an order of injunction from recording any transfer of shares from the 1st Defendant to any party without the Plaintiffs consent. 16 appeal 855.03 gr..sxw (d.1) That pending the hearing and final disposal of the suit it just necessary and proper that the Court Receiver, High court, Bombay or any other fit and proper person be appointed Receiver of the said 45,001 shares with all powers under Order 40 Rule 1 of the Code of Civil Procedure, 1908. “with a specific direction to exercise all rights in respect of the said shares as per directions of the Plaintiffs.” (e) for interim and ad-interim orders in terms of prayers (c) and (d) & (d.1) above; (f) for costs; (g) and for such further and other orders and reliefs as this Hon’ble Court may deem fit and proper in the facts and circumstances of this case.” 8. The plaintiffs took out Notice of Motion in the said suit wherein ad- interim relief was granted against the defendant no.1 from transferring the shares in question in breach of clause 6.1 of the said SPA dated 23rd June, 1997. The said ad-interim order was continued and has been operating against the defendant no.1. 9. In the meantime, the defendant nos.1 and 3 invited Consent Award before the Arbitrator. Thereafter, the defendant no.1 and 3 formed defendant no. 4 company. On record it has been shown as if the defendant no.1 would hold 51% shares and the subsidiary of defendant no.3 company-Morgan Trade and Commerce Ltd. would hold only 49% 17 appeal 855.03 gr..sxw shares therein. This attempt was essentially to transfer the shares of defendant no.2 company purchased by the defendant no.1 company from the plaintiffs and from the public aggregating to 75001 shares in favour of defendant no.4 company, so as to bring the said transfer within the regime provided by clause 6.1 of the said SPA dated 23rd June, 1997. When this came to the notice of the plaintiffs, the plaintiffs filed another suit in this Court being Suit No. 509/2001 wherein prayed for the following reliefs. “a) for a declaration that the Share Purchaser Agreement dated 23rd June 1997 is liable to be rescinded; b) for an order of this Hon’ble Court directing the said Share Purchase Agreement dated 23rd June 1997 be rescinded; c) that in the alternative to prayers (a) and (b) above, for a declaration that the Share Purchase Agreement dated 23rd June 1997 was voidable and has been validly avoided by the Plaintiffs; d) that in the alternative to prayers (a), (b) and (c) above, for a declaration that the Share Purchase Agreement dated 23rd June 1997 was terminable by the Plaintiffs and has been validly terminated by the Plaintiffs; e) that in the alternative to prayers (a), (b), (c) and (d) above, for a mandatory order and direction by this Hon’ble Court, directing the 1st Defendant to offer the said 75,001 shares to the Plaintiffs in accordance with the procedure prescribed in Clause 6.1 of the Share Purchase Agreement dated 23rd June 1997; f) for a declaration that the acquisition of the said 30,000 shares pursuant to the Public Offer is illegal, unlawful, null and void and of no legal effect whatsoever; g) for a declaration that the said Agreement dated 17th February 2000 and the said Consent Award dated 21st September 2009 are not 18 appeal 855.03 gr..sxw binding on the Plaintiffs and/or Defendant No.2 and/or that the same are illegal, null and void; h) for a permanent injunction restraining the defendant Nos.1, 3 and 4 from : (i) acting in pursuance of the Share Purchase Agreement dated 23rd June 1997; (ii) exercising any rights in respect of the said 75,001 shares (in particular voting rights in connection therewith) and/or from receiving any dividends, rights in respect of the same; (iii) exercising any rights including its beneficial ownership in, to, upon or in respect of the said 75,001 shares; i) that the Defendants be restrained by permanent order and injunction of this Hon’ble Court from transferring and/or registering and/or taking any steps to transfer and/or register the said 75,001 shares in the name of any person or persons firm or body corporate including 1st and/or 3rd and/or 4th Defendants, without the consent of the Plaintiffs; j) that the 1st defendant be ordered and decreed to deliver/return to the respective plaintiffs the said 45,001 shares together with all accretions