Bombay High Court
Sachin C.Shah vs Hemant D.Shah on 5 March, 2012
Author: Chief Justice
Bench: Mohit S. Shah, Roshan Dalvi
SRK 1 Appl-747-11.final.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORD INARY ORIGINAL CIVIL JURISDICTION
APPEAL LODGING NO.747 OF 2011
IN
NOTICE OF MOTION NO.2722 OF 2009
IN
SUIT NO.1022 OF 2007
1. Sachin C.Shah, ... Appellant No.1/
Of Mumbai, Indian Inhabitant, (Orig.Deft.No.5)
residing at 2501, Om Vikas Towers,
105, Walkeshwar Road
Mumbai-40006.
2.
Manish Commercial Premises
Co-operative Housing Society Ltd. ... Appellant No.2/
(Orig.Deft.No.16)
Vs.
1. Hemant D.Shah,
Of Mumbai, Indian Inhabitant,
residing at 1803, Rajul "A" Apartments,
9, S.J.Mehta Road, Mumbai-400 006.
2. Mrs. Kokila H. Shah,
Of Mumbai, Indian Inhabitant,
residing at 1803, Rajul "A" Apartments,
9, S.J.Mehta Road, Mumbai-400 006.
3. Samir H. Shah,
Of Mumbai, Indian Inhabitant,
residing at 1803, Rajul "A" Apartments,
9, S.J.Mehta Road, Mumbai-400 006.
4. Vipul H. Shah,
Of Mumbai, Indian Inhabitant,
residing at 1803, Rajul "A" Apartments,
9, S.J.Mehta Road, Mumbai-400 006.
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5. Hemand D. Shah (H.U.F.), ... Respondents
Through its Karta, Mr. Hemant D. Shah, (Nos.1 to 5/ Orig.
Having address at 1803, Plff. Nos.1 to 5)
Rajul "A" Apartments,
9, S.J.Mehta Road, Mumbai-400 006.
6. Chittaranjan D. Shah,
Of Mumbai, Indian Inhabitant,
residing at 2501, Om Vikas Towers,
105, Walkeshwar Road,
Mumbai-400 006.
7. Gayatri S. Shah,
Residing at 2201, Zahra Tower,
Dr. E. Moses Road,
Worli, Mumbai- 400 018.
8. Viral C. Shah,
Of Mumbai, Indian Inhabitant,
residing at 2501, Om Vikas Towers,
105, Walkeshwar Road,
Mumbai-400 006.
9. Parul V. Shah,
Of Mumbai, Indian Inhabitant,
residing at 2501, Om Vikas Towers,
105, Walkeshwar Road,
Mumbai-400 006.
10. Chittaranjan D. Shah (H.U.F.),
Through its Karta, Mr.Chittaranjan D. Shah,
Having address at 2501, Om Vikas Towers,
105, Walkeshwar Road, Mumbai-400 006.
11. M/s. Unique Investments,
An Association of Persons,
having its office at 401, Kshmalaya,
37, New Marine Lines,
Mumbai - 400 020.
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12. M/s. Dholka Estates,
An Association of Persons,
having its office at 401, Kshmalaya,
37, New Marine Lines,
Mumbai - 400 020.
13. M/s. Climax Corporation,
An Association of Persons,
having its office at 401, Kshmalaya,
37, New Marine Lines,
Mumbai - 400 020.
14. M/s. Crystal Corporation,
An Association of Persons,
having its office at 401, Kshmalaya,
37, New Marine Lines,
Mumbai - 400 020.
15. M/s. Damodar Investments,
An Association of Persons,
having its office at 401, Kshmalaya,
37, New Marine Lines,
Mumbai - 400 020.
16. M/s. United Investments,
An Association of Persons,
having its office at 401, Kshmalaya,
37, New Marine Lines,
Mumbai - 400 020.
17. M/s. Manish Estate Private Limited,
A Company registered under the
provisions of Companies Act, 1956,
having its office At 401, Kshmalaya,
37, New Marine Lines, Mumbai - 400 020.
18. Veena Properties Private Limited
A Private Limited Company incorporated
under the provisions of Companies Act, 1956
having its registered office at
401, Kshmalaya, 37, New Marine Lines,
Mumbai - 400 020.
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19. Tata Consultancy Services Limited,
A Limited Company, incorporated under
the Companies Act, 1956, having its
registered office at Bombay House,
24, Homi Mody Street,
Fort, Mumbai - 400 001.
20. Jupiter Industries and Leasing Ltd.,
A limited company incorporated under
the Companies Act, 1956, having its
registered office at 209, Maker Bhavan III,
21, New Marine Lines, Mumbai-400 020.
21. Radheshyam Investments & Builders
Private Limited,
A Private Limited company incorporated
under the provisions of Companies Act, 1956,
having its registered office at
401, Kshamalaya, 37, New Marine Lines,
Mumbai - 400 020.
22. Deluxe Lami Paper Plast Private Limited, ... Respondents
A Private Limited company incorporated (Nos.6 to 22/Orig.
under the provisions of Companies Act, Defts. 1 to 4, 6 to
1956, having its registered office at 15 & 17 to 19)
401, Kshamalaya, 37, New Marine Lines,
Mumbai - 400 020.
Mr. S.U. Kamdar, Senior Advocate with Ms. Pooja Patil i/by Bipin
Joshi for the Appellants.
Mr.T.N.Subramanian and Mr.Pradip Sancheti, Senior Advocates with
Mr.V.Krishna, Mr.Riyaz I. Chagla i/by M/s. Khaitan & Company for
the plaintitts.
Mr.Denzil D'mello for Respondent Nos. 6,8,9 and 10.
Mr.H.N.Vakil i/by Mulla & Mulla for Respondent No.19.
Mr.G.C.Mohanty for Respondent Nos. 11 to 18 and 21 and 22.
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CORAM : MOHIT S. SHAH, C. J. AND
SMT. ROSHAN DALVI, J.
Judgment reserved on : 16 November 2011
Judgment pronounced on : 05 March 2012
JUDGMENT :(Per Chief Justice) This appeal is directed against the Judgment and order dated 11 October 2011 of the learned Single Judge of this Court dismissing the Notice of motion of the appellants herein (original defendant Nos.5 and 16) under Order VII Rule 11(d) of the Code of Civil Procedure, 1908.
2. For the sake of convenience the parties are referred to as per their status before the Trial Court. The group of plaintiffs is styled as "HD Shah Group". Plaintiff No.5 is Hemant D. Shah (HUF) of which plaintiff No.1 Hemant D. Shah is the Karta, 2nd plaintiff is the wife of the first plaintiff and 3rd and 4th plaintiffs are sons of plaintiff Nos. 1 and 2.
3. The group of defendant nos.1 to 6 is styled as "CD Shah Group". The first defendant C.D. Shah is the elder brother of first plaintiff, second original defendant was the wife of the first defendant.
Defendant Nos. 3 and 5 are the sons of the original defendant Nos. 1 and 2. Defendant No.4 is the wife of defendant No.3. Defendant No. 6 is CD Shah (HUF) of which defendant No.1 is the Karta. Following chart will show how the defendant Nos. 7 to 12 are Association of Persons consisting of the aforesaid two groups.
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Association of Members/Constituents
Persons
Defendant No. 1 - Defendant No.1, Plaintiff No.2, Defendant No.12 Defendant No. 8 - Defendant No.1, Defendant No.4, Defendant No. 14 Defendant No. 9 - Plaintiff No.1,Defendant No.4, Defendant No. 14 Defendant No.10 - Defendant No.2, Defendant No.14, Plaintiff No.3 Defendant No.11 - Defendant No.3, Defendant No.14, Plaintiff No.3 Defendant No.12 - Defendant No.6, Defendant No.14, Plaintiff No.5.
Defendant No.13 - Jointly held by the two groups. (Manish Estate Pvt.Ltd.) Defendant No.14- HD Shah Group and CD Shah Group have equal (Veena Properties shareholding.
Pvt.Ltd.)
4. Upon the death of original defendant No.2 Sarala C. Shah (wife of defendant No.1 C.D. Shah), wife of defendant No.5 is appointed as the Administrator and is joined as defendant No.2 in her capacity as Administrator of the estate of the original defendant No.2.
Defendant No.5 is the sole beneficiary of one Sachin Trust which is a private trust of which defendant No.1, original defendant Nos.2, 3 and 4 are the trustees. Defendant Nos. 1 to 5 are therefore, joined in their personal capacity as well as their capacity as trustees/beneficiaries of the said trust. Both the groups are also concerned with D. K.Shah family trust- Private trust of which plaintiff No.1 and defendant No.1 are trustees. Defendant Nos. 13, 14, 18 and 19 are the Private Limited Companies and defendant No.17 is a Public Limited Company. C.D. Shah Group also controls defendant No.18 ( Radheshyam Investments ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 7 Appl-747-11.final.odt & Builders Private Ltd.) which in term holds 13.33% shareholding in Defendant No.13- D. K. Shah family trust, of which plaintiff No.1 and Defendant No.1 are the trustees and also has 6.66 shareholding in defendant No.13. Defendant No.17 is a public limited company and 58% of the equity share capital of the said company was jointly held by the plaintiffs and defendant Nos. 1 to 6. H. D. Shah, CD Shah and D.K.Shah Groups are the shareholders of defendant No.19. Defendant No.16 Manish Commercial Premises Co-operative Society Ltd. is a registered Commercial Premises Co-operative Society owning Manish Commercial Centre wherein the suit premises are situated being 5th and 6th floors of the said building. It is the case of the plaintiffs that in the MOU the suit premises were erroneously mentioned as 4th and 5th floors and the application was made before the Arbitrator for rectification of the said mistake.
5. The plaintiffs' further case is that in or around 1994 disputes and differences arose between H.D. Shah Group and C.D. Shah Group and the Memorandum of Understanding (MOU) dated 9 March 1994 was arrived at between the two groups. As per the plaintiffs' case, by virtue of the said MOU joint family business and concerns of H. D. Shah Group and the CD Shah Group were partially distributed amongst the groups and both the groups treated Defendant Nos. 13 ,14,18 and 19 as nothing but alter ego of the CD Shah Group and H. D. Shah Group. As per the said MOU the CD Shah Group had inter alia agreed to pay the plaintiffs a sum of Rs.20 Crores and the joint family business of concerns of HD Shah Group and CD Shah Group which were carried on through various joint family concerns including various Trusts, Association of ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 8 Appl-747-11.final.odt Persons/Private Limited Companies and Partnership firms including defendant Nos.7 to 14, 18 and 19 were agreed to be divided and distributed between the groups. Under the said MOU, HD Shah Group had 25% right in the suit property at Worli belonging to defendant No.13 i.e. Manish Estates Private Limited valued at Rs.5 Crores which was to be adjusted against the sum of Rs.20 Crores which was due and payable by CD Shah Group (Defendants' Group) to HD Shah Group (Plaintiffs' Group).
6. The Annexure-C of the said MOU provided that 5th and 6th floor premises situated in a building known as Manish Commercial Centre, Worli belonging to Defendant No.16 (Manish Commercial Premises Society Ltd.) standing in the name of H. D. Shah Group will remain in the HD Shah Group (plaintiffs). As per the plaintiffs case various correspondence was exchanged between the two groups by letters dated 27 January 1996 and 19 March 1996 addressed by defendant No.1 to Plaintiff No.1 whereby the defendants Group states that MOU is final and binding on them under which the defendants Group will perform its obligations under the said MOU- Exhibits and C annexed to the present suit. In June and July 1997, the plaintiffs also sent letters requesting defendant Nos. 1 and 14 to furnish true and complete statement of affairs and accounts of defendant Nos. 1 to 14 and defendant Nos. 1 to 19 to furnish complete statement of affairs and account of defendant Nos. 7 to 12 and 14 and 19 which are produced as Exhibit V-6- to V-9 annexed alongwith the plaint. As per the plaintiffs' case various correspondence exchanged between the two groups admitted the family arrangement arrived at between the two groups and the defendant- CD Shah Group has partly acted upon ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 9 Appl-747-11.final.odt the said MOU as per the details given in the plaint. The plaint gives detailed account of the various steps taken by the parties for partial implementation of the MOU.
7. It is necessary to indicate here that the dispute between the parties as argued at the hearing of this appeal is about the ownership and income arising from 5th and 6th floor premises in Manish Commercial Centre. In the year 1989, the premises were leased to one Tata Company. The name of the said company was changed from time to time and ultimately lessee-company was amalgamated in Tata Consultancy Services Limited which is present defendant No.15.
8. The plaintiffs filed Suit No.1421 of 1997 before this Court inter alia praying that the defendant Nos. 1 to 6 be ordered and decreed to give account for the compensation received from Tatas in respect of the said 5th and 6th floor premises in Manish Commercial Centre. The plaintiffs also took out Notice of Motion No.1377 of 1997 in the said suit seeking interim/ad-interim reliefs. After hearing the parties, this Court by order dated 6 May 1997 inter alia directed the defendants- CD Shah Group to deposit 50% of the lease rent collected from Tatas in respect of the 5th and 6th floors premises in Manish Commercial Centre with the Prothonotary and Senior Master of this Court and the plaintiffs were permitted to withdraw the said deposited amount, as per following paragraphs of the order :-
"(5) The plaintiffs have also prayed for an order that the defendants be directed by mandatory order to deposit the lease rent collected from Tata Burroughs Ltd. (presently ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 10 Appl-747-11.final.odt known as Tata Infotech Ltd. in respect of the 5th and 6th floors of Manish Commercial Centre, Worli with the plaintiffs.
(6) In support of this contention, reliance has been placed by plaintiffs upon annexure to the said MOU which provides that the premises on 4th and 5th floor at Manish Commercial Centre, Worli which is on lease to M/s. Tata Burroughs standing in the name of HDS group shall remain with HDS group.
(7) So far as the plaintiffs are concerned, I am of the opinion that the plaintiffs are entitled to the reliefs in terms of prayer clause (c) by which defendants are directed to deposit 50 per cent of the lease rent collected from Messers. Tata Burroughs Ltd. (subsequently changed to Tata Unisys Ltd. And presently known as Tata Infotech Ltd.) in respect of the 5th and 6th floors of Manish Commercial Centre, Worli, with the Prothonotary and Senior Master, High Court, Bombay and the plaintiffs are permitted to withdraw the same. Against the withdrawal of amount in terms of prayer clause (c), plaintiffs to execute Indemnity Bond in favour of the Prothonotary and Senior Master, High Court, Bombay. Deposit for the month of May, 1997 to be made by defendants on or before 15th May, 1997 and subsequent deposits on or before 15th of each of the succeeding month."
9. In compliance with the said order, the defendants- CD Shah Group started paying the plaintiffs 50% of the lease rental received from Tata after deducting the society outgoings. Ultimately when the said Notice of Motion No.1377 of 1997 and subsequent Notice of Motion came up for hearing, Minutes of order dated 9 February 2000 was tendered. The said minutes of order provided that the dispute raised in the year 1977 be referred to the Arbitrator and the ad-interim order dated 6 May 1997 shall continue till disposal of the Arbitration proceeding. The learned Single Judge of this Court, ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 11 Appl-747-11.final.odt accordingly, passed order dated 9 February 2000 disposing of the suit in terms of Minutes of the order.
10. In the year 2002, the plaintiffs took out the contempt petition against the defendant CD Shah Group and by order dated 15 September 2003 this Court disposed of the contempt petition in view of the statement made by defendant No.2 (CD Shah Group) that he shall deposit the outstanding dues i.e. monthly lease rentals in compliance with the order dated 6 May 1997.
11. Jupiter Industries had taken loan from the Canara Bank and plaintiff No.1 and defendant No.1 were acted as guarantors for the said loan. There were proceedings before the DRT initiated by Canara Bank against defendant No.7-Jupiter Industries Company exclusively belonging to CD Shah Group for the recovery of its dues.
In the course of this proceeding, the DRT sold certain properties existing in Manish Commercial Centre building. The H. D. Shah Group had made an application before the Arbitrator to keep aside the said properties towards the claim of plaintiffs-H. D. Shah Group under MOU of 1994. The learned Arbitrator passed order dated 29 September 2005 lifting the corporate veil and directed to deposit a sum of Rs.5 Crores in the escrow account towards the claim of the petitioners/plaintiffs and the DRT accordingly passed order dated 26 October 2005 for keeping aside Rs.5 Crores out of the said proceeding of defendant No.13's Worli property and for depositing the same with Canara Bank for a period of one year for the claim of the present plaintiffs (petitioners in arbitration proceeding) in which the plaintiffs had 50% shareholding.
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12. The said order came to be challenged by defendant CD Shah Group and defendant No.13 before this Court in Arbitration Petition No.295 of 2006 under section 9 of the Arbitration Act.
13. Defendant CD Shah Group took up the stand that some of the entities particularly, defendant No.13 was not party to the MOU and as such, not amenable to such arbitration proceeding.
14. This Court vide its two orders dated 14 July 2006 held that defendant No.13 was not party to the said MOU and the Arbitrator can only pass an order against a party to the Arbitration and that since defendant No.13 was not a party, no orders could be passed by the Arbitrator against Defendant No.13. The Arbitration Petition accordingly came to be allowed by the learned Single Judge. The said order was upheld by the Division Bench in appeal and the Supreme Court dismissed the SLP on 6 November 2006.
15. The plaintiffs' further case is that in the meantime, when Tatas were contemplating to handover the vacant possession of the suit premises of 5th and 6th floors of Manish Commercial Centre, defendant Nos. 1 to 6 were trying to take exclusive control and possession of the said premises and were trying to enter into negotiations with other parties to lease out the said premises to the exclusion of the plaintiffs-HD Shah Group. The plaintiffs, therefore, filed Arbitration Petition No.452 of 2005 seeking inter alia continuation of the ad interim order dated 6 May 1997 and the order dated 9 February 2000 referred to in paragraph 8 above. In the said ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 13 Appl-747-11.final.odt arbitration proceeding the defendant Nos. 1 to 6 contended that the defendant Nos. 7 to 12 and defendant No.14 were not parties to the MOU of 1994 and therefore, no orders could be passed in the application under Section 9 of the Arbitration and Conciliation Act.
By order dated 6 December 2006, this Court disposed of the Arbitration Petition No.452 of 2006 after recording the statement of defendant Nos. 1 to 4 and 6 that they will maintain status quo in relation to the suit premises till 10 January 2007.
16. In view of the stand adopted by defendant Nos. 1 to 6 that defendant Nos. 7 to 12 and 13 were not parties to the MOU of 1994 and not amenable to arbitration proceeding, the plaintiff filed the present Suit No.1022 of 2007 praying for following substantive reliefs:-
"(a) to declare that the defendant Nos.13,14,18 and 19 Companies and Defendant Nos 7 to 12 being AOP's were at all material times nothing but an alter ego of the CD Shah Group (Defendant Nos. 1 to 6) and the HD Shah Group (plaintiffs) being jointly managed and controlled by them and are bound by the MOU dated 9 March 1994 and continue to be alter ego of both the groups, till the said MOU is implemented in its entirety and that it be ordered, declared that the Award that may be passed in the pending Arbitration presided by the Hon'ble Mr. Justice D.R.Dhanuka (retired) for enforcement of claims under the said MOU dated 09 March 1994 is binding and/or enforceable against the Defendant Nos. 7 to 12, 13,14,18 and 19.
(b) to restrain Defendant Nos.1 to 12 and 14 from dealing with and/or disposing off and/or encumbering and/or creating any third party rights on the 5th and 6th floor suit premises in the Manish Commercial Centre Building save and except with the consent and permission of the plaintiffs.::: Downloaded on - 09/06/2013 18:15:33 :::
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c) to declare that the HD Shah Group (Plaintiffs) and
the CD Shah Group (Defendant Nos. 1 to 6) are entitled to equal half share each in the lease rent and/or compensation realized and/or which may be realized from the said 5th and 6th floor suit premises in the Manish Commercial Centre Building;
d) to restrain Defendant Nos. 1 to 12 and 14 from taking over the possession and /or occupation of the said 5th and 6th floor suit premises in the Manish Commercial Centre building to the exclusion of the plaintiffs;
e) to order and decree that the Defendant Nos. 1 to 12 and 14 submit and render true, complete and faithful account of the affairs of the Defendant Nos. 7 to 12 and 14 from the date of the said Memorandum of Understanding (i. e. dated 09. March 1994 till the date of decree of the suit;
f) to order, direct and decree the CD Shah group (Defendant Nos. 1 to 6) to pay Canara Bank, New Marine Lines Branch, a sum of Rs.5.02 Crores with further interest from 10th February 2005 till payment and/or realization under the Recovery Certificate in R. P. No.473 of 2002 which the said Canara Bank has obtained against Defendant No.17, plaintiff No.1 and Defendant No.1;
g) to restrain defendant No.16 from giving any permission or NOC of whatsoever nature to Defendant Nos. 1 to 12 or Defendant No.14 to parting with possession of creating any third party rights of the said 5th and 6th floor suit premises of the said Manish Commercial Centre;
h) to order, direct and decree the Defendant No.13 to give full and complete account of the monies received by it from DRP-1, Mumbai, out of the sale proceeds of Worli property to deposit the amount so received by the Defendant No.13 from DRT-1, Mumbai, in this Court for the purpose of securing plaintiff's claim in the said pending Arbitration proceedings;"::: Downloaded on - 09/06/2013 18:15:33 :::
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17. In the aforesaid suit defendant No.5 took out a Notice of Motion No.2722 of 2009 under order VII Rule 11(d) of the Code of Civil Procedure for the following substantive reliefs:-
"(a) that this Hon'ble Court be pleased to dismiss the present suit of the plaintiffs under the provisions of Order VII,Rule 11 of Civil Procedure Code, 1908,particularly for want of cause of action;
(b) that this Hon'ble Court be pleased to declare that the plaintiffs are not entitled to continue the proceedings before the learned Arbitrator as well as the present suit for similar reliefs in both the proceedings;
(c) In the alternative to prayer (b) above, this Hon'ble Court be pleased to stay further proceedings in the above suit as well as in the Notice of Motion being Notice of Motion No.1348 of 2007;
(d) In the alternative to prayer (c) above, pending the hearing and final disposal of the present suit, the hearing before the Learned Arbitrator, the Hon'ble Mr. Justice D.R.Dhanuka (Retd.) be stayed."
18. The above notice of motion was filed in July 2009 and the pleadings were complete in September 2009. During pendency of the notice of motion, the learned Arbitrator (Mr. Justice D.R.Dhanuka (Retired) passed award against defendant nos.1 to 6 in July 2010.
19. After hearing the learned counsel for the parties, the learned Single Judge dismissed the notice of motion filed under Order VII Rule 11(d). It is against the aforesaid order dated 11 October 2011 that the present appeal is filed.
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20. Mr. Kamdar, learned counsel appearing for the appellants (defendant Nos.5 and 16) has reiterated the contentions raised before the learned Single Judge-
i) the present suit is barred by Sections 5 and 35 of the Arbitration and Reconciliation Act,1996;
ii) in any view of the matter, the suit filed in the year 2007 for enforcement of the MOU of 1994 against the defendant No.7 onwards is barred by law of limitation.
21. Learned counsel for the appellants contended that the suit is not maintainable in view of the bar created by Sections 5 and 35 of the Arbitration and Conciliation Act, 1996. The plaintiffs are seeking to enforce the claims which are referred to in arbitration proceeding and the award made in pursuance thereof and that the award to be passed by the Arbitrator would be binding and enforceable against defendant Nos. 7 to 14 and 18 and 19. It was submitted that such relief could have been sought only by taking recourse of the provisions of the Arbitration and Conciliation Act, 1996 and it cannot be done by indirect or oblique method by filing suit.
22. Learned counsel for the appellants vehemently submitted that Section 5 of the Arbitration and Conciliation Act, 1996 ("Act"or the "new Act") provides for reference to arbitration by the parties and rather encourages it. The new Act encourages reference of disputes to the arbitration and therefore, notwithstanding anything contained in any other law in the matters governed by Part-I, no judicial authority ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 17 Appl-747-11.final.odt should interfere except so provided by Part I of the Act. Hence once the matter was referred to arbitration and now the award has also been rendered by the learned Arbitrator, the suit is not maintainable.
23. In support of the contention against maintainability of the suit, strong reliance is placed upon Section 5 of the Act which reads as under:-
"5. Extent of judicial intervention - Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene except where so provided in this Part."
It is also contended that the Award has become final and binding between the parties to the Arbitration as also parties claiming under them. Reliance is placed upon section 35 of the Act which reads as under:-
"35. Finality of arbitral awards.- Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively."
24. Secondly, the learned counsel for the appellants submitted that the suit filed in the year 2007 was barred by law of limitation. The very declaration and foundation of the declaration in the instant suit was a part of the reliefs claimed in the suit filed in 1997. That suit was disposed of by an order dated 9 February 2000. Hence, another civil suit to claim a declaration in relation to the rights flowing from the MOU of 1994 is barred by law of limitation. It was also contended that there is no statement in the plaint that cause of action accrued on the basis of any event after institution of the suit in the year 1997.
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25. The arguments of the learned counsel for defendant No.5 were adopted by the learned counsel appearing on behalf of the other defendants.
26. Mr. Subramanian, learned counsel for the plaintiffs (respondent Nos.1 to 5 in the appeal) submitted that when the plaintiffs filed a suit in the year 1997 for enforcement of the MOU entered into by defendant Nos. 1 to 6 for themselves and in respect of the parties held in the names of defendant Nos. 7 to 19, the disputes were referred to the Arbitrator by order dated 9 Feb. 2000 and at that stage, the defendants in the suit (defendants 1 to 6) had never contended that the disputes regarding the enforcement of MOU could not be entertained by the Arbitrator because the Association of Persons/Private Limited Companies and the parties holding shares in Jupiter Industries and Leasing Ltd. were not parties to the MOU and also were not parties to the suit of 1997. It was only before the learned Arbitrator that the defendant Nos. 1 to 6 raised the dispute for the first time in the year 2005 that defendant No.7 onwards were not parties to the arbitration proceeding and they were not parties to the suit of 1997 and therefore, the properties of those entities cannot be the subject matter of arbitration. The said contention was not accepted by the learned Arbitrator and ultimately the learned Single Judge of this Court by order dated 22 August 2006 and the Division Bench of this Court by order dated 5 September 2006 accepted the above contention and the Supreme Court dismissed the SLP on 6 November 2006. Hence, defendant Nos. 1 to 6 having raised the above contention for the first time in 2005 cannot now be permitted to ::: Downloaded on - 09/06/2013 18:15:33 ::: SRK 19 Appl-747-11.final.odt challenge the maintainability of the suit against defendant No.7 onwards. It is submitted that since the learned Arbitrator was not allowed to examine the questions whether defendant Nos. 7 to 14 and 18 and 19 were alter ego of defendant Nos. 1 to 6, the plaintiffs cannot be deprived of their rights for adjudication of their claims against those defendants.
27. The plaintiffs' claim is not only against defendants 1 to 6, but against all persons claiming under those defendants. The term "persons" would include the proprietory concerns, partnership firm, joint ventures and registered companies incorporated by defendants 1 to 6. The award would, therefore, have to be executed against not only defendants 1 to 6, but all the persons and entities of these defendants. The plaintiffs claim that defendants 7 to 14, 18 and 19 are the alter egos of defendants 1 to 6 being various entities formed and incorporated by them. This would have to be proved by the plaintiffs. Since they were not allowed to do so in the arbitration proceedings, they have to be allowed to prove their case in the suit filed in January, 2007, because of the contention raised by defendant Nos.1 to 6 for the first time in 2005 which came to be upheld by this Court in 2006.
28. It is submitted by Mr. Subramanian, learned counsel for the plaintiffs that there is no question of present suit being barred by law of limitation merely because it seeks enforcement of the MOU of 1994 against the defendant No.7 onwards. It is submitted that the suit premises on 5th and 6th floor of Manish Commercial Centre which belongs to defendant No.13 and managed by defendant No.16 Co- operative society was a subject matter of various orders passed by this ::: Downloaded on - 09/06/2013 18:15:34 ::: SRK 20 Appl-747-11.final.odt Court on 6 May 1997 and thereafter also on 9 Feb. 2000 by continuing the said ad interim order while referring the dispute between the parties to the Arbitrator and again on 12 December 2002 in Contempt Petition No.21 0f 2002. It is further submitted that even the orders were passed against the defendant CD Shah Group by the learned Arbitrator in the year 2005 and the DRT restraining Defendant No.13 from withdrawing the amount of Rs.5 Crores from the DRT as, according to the plaintiffs, the said amount was payable to the plaintiffs against the liability of CD Shah Group to pay Rs.20 Crores to the plaintiffs HD Shah Group under the MOU of 1994. Similar orders were passed by this Court on 6 December 2006 recording the statement of defendant nos.1 to 4 and 6 that they will maintain status-quo in relation to suit premises till 10 January 2007.
29. It is, therefore, submitted that in view of the above subsequent developments pertaining to suit premises being 5th and 6th floors of the Manish Commercial Centre, present suit filed in the year April 2007 is within the period of limitation.
30. It is also submitted by Mr.Subramanian that if any relief or part of the relief is not barred by any law, the suit must be allowed to proceed and that only prayers are not relevant to determine the application under Order 7 Rule 11, the entire plaint has to be seen. Reference is made to the case of Ram Prakash Gupta v. Rajiv Kumar Gupta and others, (2007) 10 SCC 59 in that behalf.
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31. We find that prayer (a) is divisible. Hence, the legal question that arises is that even if the latter part of the prayer (a) is refused, as barred under section 5 of the Arbitration and Conciliation Act, can the former part be granted as not barred under section 3 of the Limitation Act? If the fact that defendants 7 to 14, 18 and 19 are alter egos of defendants 1 to 6 is to be seen only from the MOU defendants may be able to contend that the suit would be barred by limitation. However, it is open to the plaintiffs' to show de hors the MOU that defendants 7 to 14, 18 and 19 are alter egos of defendants 1 to 6, and if they succeed in doing so, the suit claim would arise only after the date of the Award - to execute the Award - or from the refusal to perform the obligations under the MOU/Award and in either of these events, the suit would not be barred by the Limitation Act, 1963 or Arbitration and Conciliation Act, 1996.
32. We may also note that Notice of motion under Order VII Rule 11(d) was taken out only by defendant No.5 Sachin C. Shah and not by other defendants. It is true that, the other defendants had supported defendant No.5 at the hearing of Notice of Motion as well as hearing of the appeal but the fact remains that notice of motion was taken out by defendant No.5 alone, and the present appeal has been filed only by defendant Nos.5 and 16.
33. As per the settled legal position, for deciding whether the plaint discloses cause of action or not, the Court has to see only the averments in the plaint and the accompanying documents relied upon ::: Downloaded on - 09/06/2013 18:15:34 ::: SRK 22 Appl-747-11.final.odt in the plaint and the facts elicited from the plaintiff by examining him under Order 10 of the Code of Civil Procedure. For the purpose of deciding the application under Order 7, Rule 11 for rejecting the plaint, the Court has also to presume the facts stated in the plaint as correct. The Court cannot for the determination of the application, look into the defence set up by the defendants.
34. Having seen the composition of various Associations of Persons being defendant Nos. 7 to 12 and shareholding of defendants Nos. 13,14,18 and 19 which are Private Limited Companies as indicated in the plaint, it is clear that when defendant Nos. 1 to 6 as CD Shah Group entered into an MOU with the plaintiffs H. D. Shah Group with full particulars of the assets standing in the name of said Associations of Persons and Private Limited Companies and said defendant Nos. 1 to 6 having agreed to have the disputes regarding implementation or enforcement of the MOU of 1994 referred to Arbitrator, pursuant to which this Court passed the order disposing of the suit of 1997 and continuing the ad interim order during pendency of arbitration proceedings for properties including the properties standing in the names of the Association of Persons /Private Limited Companies/Trustees of Sachin family trust and it was for the first time only in 2005 that defendant Nos. 1 to 6 raised the contention before the learned Arbitrator that arbitration cannot continue against Associations of Persons/Private Limited Companies/Trustees as they were not parties to the MOU though learned Arbitrator rejected their contention, this Court did accept the contention and restricted the scope of arbitration to disputes between the plaintiffs and defendant Nos. 1 to 6 on the ground that only they were parties to the arbitration ::: Downloaded on - 09/06/2013 18:15:34 ::: SRK 23 Appl-747-11.final.odt proceeding. Defendant Nos. 1 to 6 thus, having taken advantage of getting their contention accepted by this Court and getting the scope of arbitration proceeding narrowed down to the disputes between the plaintiffs and defendant Nos. 1 to 6, the appellants (defendant Nos. 5 and 16) cannot now be permitted to reiterate the contention that the present suit filed in the year 2007 against defendant No.7 onwards is not maintainable. The plaintiffs must have some forum to get their claims in respect of the properties standing in the name of Association of Persons/Private Limited Companies/Trustees adjudicated. The plaintiffs would, therefore, be required to prove that defendants 7 to 14, 18 and 19 are alter egos of defendants 1 to 6 and hence enforce the aforesaid Award against each of them.
35. For the aforesaid reasons, the contention raised on behalf of the appellants and other defendants regarding non maintainability of the present suit in view of the provisions of Section 5 and 35 of the Arbitration and Conciliation Act, 1996 must therefore, be repelled.
We are therefore, in agreement with the view of learned Single Judge that the plaintiffs' claim for declaration with regard to the status of the entities and their position of law has to be determined in a civil suit.
36. As regards the question of limitation, the learned counsel for the appellants submitted that the learned Single Judge has not given any reasons for rejecting the appellants' contention that the suit claim is barred by law of limitation.
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37. It is not possible to accept the above contention because the learned Single Judge has given brief reasons by making a reference to the suit of 1997 and events thereafter. The learned Single Judge has also held that the question whether declaration and reliefs claimed in the suit of 1997 is one and the same as the declaration and reliefs claimed in the 2007 and whether the claim is barred by law of limitation is a matter which cannot be conclusively decided at the stage of deciding the motion under Order VII Rule 11(d) of the Code of Civil Procedure because limitation is a mixed question of law and facts. Mr. Kamdar, learned counsel for the appellant, however, addressed us at length on merits of the question of limitation and invited our ruling on the same.
38. Accordingly, we did permit the learned counsel for the appellants and other defendants as well as the learned counsel for the plaintiffs to address us at length as regards the question of limitation also. After hearing the learned counsel for the parties, we proceed to decide this question.
39. The facts indicated in the earlier part of the judgment clearly show that as per the plaintiffs' case, the MOU was entered into between the plaintiffs and defendant Nos. 1 to 6 in respect of the properties of H. D. Shah Group and CD Shah Group including the properties standing in the name of Associations of Persons/Private Limited Companies in which plaintiffs as well as defendant Nos. 1 to 6 were members and combination of shares of shareholding. The dispute about the liability of CD Shah Group to pay Rs.20 Crores to ::: Downloaded on - 09/06/2013 18:15:34 ::: SRK 25 Appl-747-11.final.odt HD Shah Group (plaintiffs) and also the rights in the properties standing in the name of those Association of Persons/Private Limited Companies including defendant No.13 Manish Estates Private Limited were the subject matter of Suit No.1421 of 1997. Those disputes were referred to arbitration as per the Minutes of the order dated 9 February 2000 and the consent order of even date passed by this Court and therefore, there was no reason for the plaintiffs to file a separate suit against those Associations of Persons/Private Limited Companies. It was for the first time in the year 2005 that CD Shah Group raised the contention that those Associations of Persons /Private Limited Companies were not parties to the arbitration proceeding and therefore, they were outside the scope of the arbitration proceeding. For the first time, the learned Single Judge of this Court accepted this contention on 22 August 2006, the Division Bench upheld that order on 5 September 2006 and the Supreme Court dismissed the plaintiffs' SLP on 6 December 2006 and hence, the present suit filed by the plaintiffs in April 2007 is very much within the period of limitation.
40. As regards the plaintiffs' prayers in the suit to the effect that the above named Associations of persons/Private Limited Companies/Trustees of Sachin Shah trust are alter ego of defendant Nos. 1 to 6, on merits the Court will examine this claim and decide it after the trial, but the suit cannot be dismissed at the threshold under the provisions of Order VII Rule 11(d) of the Code of Civil Procedure, 1908.
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41. In view of the above discussion, we find no merit in the appeal. The appeal is, accordingly, dismissed.
CHIEF JUSTICE SMT. ROSHAN DALVI, J.
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