Calcutta High Court
M/S. Jagrati Trade Services Pvt. Ltd. & ... vs Sanjit Kumar Singh & Ors on 30 January, 2019
Author: Soumen Sen
Bench: Soumen Sen
1 ORDER
GA No. 229 of 2019 CS No. 6 of 2019 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction M/S. JAGRATI TRADE SERVICES PVT. LTD. & ANR.
Versus SANJIT KUMAR SINGH & ORS.
BEFORE:
The Hon'ble JUSTICE SOUMEN SEN Date : 30th January 2019.
Appearance:
Mr. Rtnanko Banerji, Sr. Adv.
Mr. Debnath Ghosh, Adv.
Mr. Sankarsan Sarkar, Adv.
Mr. Aditya Kanodia, Adv.
Mr. Indradeep Basu, Adv.
...for the petitioners.
Ms. Aritra Chakraborty, Adv.
...for defendant No. 1.
Mr. Zeeshan Haque, Adv.
...for respondent Nos. 10 & 24.
Mr. Farhan Ghaffar, Adv.
...for defendant Nos. 11-17.
Mr. Pratap Chatterjee, Sr. Adv.
Mr. Samrat Sen, Sr. Adv.
Mr. Shrayashee Das, Adv.
...for defendant Nos. 9 and 23.
Mr. N. Srinivas, Adv.
Mr. M. K. Singh, Adv.
...for defendant No. 2.
The plaintiffs claim to be the shareholders of the defendant No. 10. The plaintiffs allege that the defendant No. 1 who was appointed as the escrow agent has acted in breach of its obligation and did not hand over the shares to the plaintiffs in terms of the agreement. It is alleged that the defendant No. 1 has colluded with the defendant Nos. 24 and 25 and the shares purchased from the Bhargavas in relation to the defendant No. 10 have been parted with. The escrow agent has also made over the 2 title deeds of the properties of the defendant No. 10 to the defendant Nos. 24 and 25 and on the basis of such release of title deeds, the defendant Nos. 24 and 25 have created mortgage of the properties of the defendant No. 10.
Mr. Ratnanko Banerji, learned senior counsel representing the plaintiffs has referred to the escrow agreement in which the plaintiffs, Orbit and Damani have been referred to as buyers. Mr. Banerji submits that the said agreement records that the title documents and the company related documents relating to defendant No. 10 are to be held by the escrow agent. Mr. Banerjee refers to Clauses 5 and 7 of the escrow agreement and submits that on successful completion of the transaction between the sellers and the buyers and payment of the purchase consideration and the loan amount by the buyers to the sellers and the company in the manner mentioned in the said agreement, the original title documents and the company related documents would be handed over by the escrow holders to the buyers. These original title documents and company related documents were and are now being held by the defendant No. 1 as the escrow agent. Mr. Banerji has referred to pages 175 and 176 of the petition to show that the entire consideration amount has been paid both in respect of the voting shares and non-voting shares. Mr. Banerji, however, has fairly submitted that there is a shareholders agreement and a dispute has arisen between the shareholders of the defendant No. 10 and an arbitration proceeding 3 has commenced. An application under Section 9 of the Arbitration and Conciliation Act, 1996 was filed. However, no interim order was passed since an arbitral tribunal was constituted by that time. The ad interim order was also refused.
Ms. Aritra Chakraborty, learned counsel representing the defendant No. 1 submits that due to paucity of time, she is unable to obtain any instructions from the defendant No. 1 and seeks an adjournment.
Mr. Pratap Chatterjee, learned senior counsel representing the defendant Nos. 9 and 23 submits that it seems that identical prayer was made in the arbitration proceedings and a Learned Single Judge of this Court has refused to pass an ad interim order on same and/or similar facts. Mr. Chatterjee has further submitted that in view of Clause 6(c) in the escrow agreement which contains an arbitration clause and submits that the escrow agent is only bound by the award of the arbitral tribunal and the court may not have any jurisdiction to receive and try the suit, in view of Section 5 of the Arbitration and Conciliation Act, 1996.
The learned counsel representing the defendant Nos. 10 and 24 submits that the defendant No. 1 is bound by the decision to be rendered in the arbitration proceedings. 4
The learned counsel representing the defendant No. 11 has adopted the submissions made by the learned counsel representing the defendant Nos. 10 and 24.
The learned counsel representing the bank has submitted that the defendant No. 2 is not a necessary party and the defendant No. 23 has discharged its duty. Mr. Chatterjee, in response to the said submission, has stated that the transaction is unrelated to the present dispute.
On the basis of the averments made in the petition and the documents disclosed, it appears that the defendant No. 1 as an escrow agent is vested with certain powers, duties and obligations. The sale was effected in favour of the buyers jointly. The escrow agent cannot act selectively and it is the duty of the escrow agent to preserve the shares till the shares are distributed in terms of the agreement. The objection that the suit is barred in view of Section 5 of the Arbitration and Conciliation Act, prima facie, appears to be not sustainable, in view of the fact that it is not a dispute between the buyers and the sellers but is a dispute amongst the buyers inter se. Apart from the aforesaid, the plaintiffs have contended that in the arbitration proceeding, it may not be possible to seek cancellation of the mortgage. However, this is a prima facie view, subject to hearing the parties on the returnable date. The respondent No. 1 is restrained from dealing with and/or 5 parting with the shares of the plaintiffs for a period of 10 weeks or until further order, whichever is earlier. The defendant No. 1 shall also not part with any company related documents without the express leave of the Court. Affidavit in opposition shall be filed within three weeks from date; reply thereto, if any, within two weeks thereafter.
The matter shall appear fairly at the top as a 'Motion Adjourned' on 18th March 2019.
(SOUMEN SEN, J.) S. Kumar