Bombay High Court
Ramesh Sumermal Shah vs Bharat Kishoremal Shah on 8 May, 2024
Author: R.I. Chagla
Bench: R.I. Chagla
2024:BHC-OS:7542
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc
Kavita S.J.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO.10500 OF 2023
Ramesh Sumermal Shah & Ors., ...Petitioners
Versus
Bharat Kishoremal Shah & Ors., ...Respondents
WITH
INTERIM APPLICATION (L) NO.13398 OF 2023
IN
COMMERCIAL ARBITRATION PETITION (L) NO.10500 OF 2023
Ramesh Sumermal Shah & Ors., ...Applicants/
Petitioners
Versus
Bharat Kishoremal Shah & Ors., ...Respondents
----------
Mr. Sharan Jagtiani, Senior Counsel a/w Ankit Lohia, Counsel a/w
Mr. Rahul Sarda, Counsel a/w Mr. Varun Nathani, Counsel a/w Mr.
Chirag Sarawagi and Ms. Riya Thakkar i/b Tushar Goradia for the
Petitioners.
Mr. Ashish Kamat, Senior Counsel a/w Mr. Rohan Savant, Mr. Ishwar
Nankani and Mr. Huzefa Khokhawala, Mr. Aryaman Ghag i/b M/s
Nankani and Associates for the Respondent Nos.1 and 2.
----------
KAVITA
SUSHIL CORAM : R.I. CHAGLA, J.
JADHAV
Digitally signed
by KAVITA
SUSHIL JADHAV DATED : 8TH MAY, 2024.
Date: 2024.05.08
12:31:39 +0530
1
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ORDER :
1. By the Interim Application (L) No.13398 of 2023, the Applicants/Original Petitioners are seeking a stay on the effect, implementation and enforcement of the impugned Interim Award dated 15th December, 2022 duly corrected by Order dated 23 rd December, 2022 passed by the Arbitral Tribunal.
2. By the above Commercial Arbitration Petition, in which the present Interim Application has been filed, the challenge is to the Interim Award dated 15th December, 2022 as corrected ("impugned Interim Award") by which the Arbitral Tribunal has granted the Money Decree of Rs.42.65 Crores against the Petitioners and in favour of Respondent Nos. 1 and 2. The Petitioners have sought an unconditional stay on the impugned Interim Award.
3. The facts briefly stated are as under:
The Sumer Group constituted 3 branches - Ramesh Shah Group which are the Petitioners, Bharat Shah Group which are the Respondent Nos. 1 and 2 and the Lookar Group which are the Respondent Nos. 3 and 4. The dispute between the parties to the 2 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc arbitral proceedings emanates under a Memorandum of Understanding ("MOU") dated 25th September, 2014 and Supplemental Memorandum of Understanding ("SMOU") dated 8th December 2015 under which the parties agreed to a division of various entities / assets forming part of the Sumer Group.
4. Disputes and differences arose between the parties in compliance of obligations under the MOU and SMOU. Each party accused the other of not complying with its obligations under the MOU and SMOU. The Petitioners alleged that the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 breached their obligations under the MOU and SMOU. Similar allegations were raised by the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4.
5. The Respondent Nos. 3 and 4 filed a Section 9 Petition against the Petitioners relying upon the Partnership Deeds, whereas the Respondent Nos. 1 and 2 filed Suit No.319 of 2020. During these proceedings, the parties consented to refer their disputes under the MOU and SMOU to an Arbitral Tribunal.
6. By an Order dated 8th April, 2021, this Court constituted the Arbitral Tribunal.
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7. On 16th August 2021, the Respondent Nos. 1 and 2 filed their Statement of Claim for specific performance. Similarly, the Respondent Nos. 3 and 4 filed their Statement of Claim seeking specific performance.
8. In October 2021, the Petitioners filed their Statement of Defence. The Petitioners in their Statement of Defence to the claim filed by the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 respectively, specifically pleaded that the respective Respondents had breached their obligations under the MOU and SMOU. The Petitioners in addition, had also filed a Counter Claim.
9. The Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 obtained interim Orders dated 21 st January, 2022 and 20th June, 2022 on the contention that they continued to remain partners in Sumer Builders and Sumer Corporation. By the interim orders, injunction was granted in respect of properties of the Petitioners' Group which injunction continues till today.
10. On 17th December, 2021, the Respondent Nos. 1 and 2 filed an Application under Section 31(6) of the Arbitration and Conciliation Act, 1996 ("the Arbitration Act") seeking a Decree on 4 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc admission under Order XII Rule 6 of the Civil Procedure Code, 1908 ("CPC") alleging that the Petitioners have admitted their liability to pay the balance sum of Rs.42.65 Crores. The Petitioners have in response to the Application categorically denied their liability to pay any amount to the Respondent Nos. 1 and 2 inter alia on account of breaches committed by Respondent Nos. 1 and 2 and its lack of readiness and willingness.
11. By the impugned Interim Award, the Arbitral Tribunal granted Money Decree of Rs.42.65 Crores against the Petitioners and in favour of Respondent Nos. 1 and 2.
12. The present Commercial Arbitration Petition was filed on 12th April, 2023 and the present Interim Application taken out by the Petitioners therein on the said date.
13. Mr. Sharan Jagtiani, learned Senior Counsel for the Petitioners has submitted that the MOU and SMOU set out reciprocal obligations to be performed by the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 and the Petitioners. He has submitted that these reciprocal promises included transfer of all right, title, interest and control over assets and ownership in partnership firms / 5 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc companies as set out in Annexure A1 to A5 of the MOU as modified by the SMOU. Further, the taking over of liabilities to the extent of Rs.1315 Crores by the Petitioners as well as the payment of amounts by the Petitioners to the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4.
14. Mr. Jagtiani has submitted that admittedly, the Sumer Group was in financial difficulty. It had third party liabilities of approximately Rs.1300 Crores. The liability along with the monetary sums payable to the Respondents Nos. 1 and 2 and Respondent Nos. 3 and 4 were to be paid by disposing off assets of the Sumer Group. He has placed reliance upon Clause 2(a) of the MOU which provides complete autonomy to the Petitioners to deal with the properties 'as they may deem fit'. This includes the discretion to use the proceeds of the said properties to pay the Respondent Nos. 1 and 2. He has submitted that this understanding was accepted by the Respondent Nos. 1 and 2 as is evident from their Statement of Claim. In the Statement of Claim, the pleaded case of the Respondent Nos. 1 and 2 is that the proceeds from the Santacruz property and Mazgaon property were used to clear liability of the Sumer Group and pay monetary consideration payable to the Respondent Nos. 1 and 2. He 6 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc has placed reliance upon Board Resolutions dated 1 st September, 2014 and 6th September, 2014, wherein the Respondent Nos. 1 and 2 have pleaded that "...The proceeds from the sale of units were to be used towards clearing the liabilities of the Sumer Group and paying the monetary consideration payable to Bharat Group and Loonkar Group ."
15. Mr. Jagtiani has submitted that the obligation under the MOU and SMOU are inextricably linked to each other. The obligation of the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 recorded under Clause 2(a) is linked to the obligation of the Petitioners to pay monies towards the Sumer group liability as well as towards the Respondent Nos. 1 and 2 and Respondent Nos.3 and 4 respectively. These obligations are not independent of each other.
16. Mr. Jagtiani has submitted that there is a specific pleading in the Statement of Defence that even prior to the MOU, there were Board Resolutions of the relevant entity, namely Sumer Buildcorp Private Ltd, to the effect that the Petitioners were authorized to negotiate with the Adani Group for grant of development rights of the Mazgaon property. This is reinforced by 7 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc the language of the MOU in terms of Clause 2(a) of the MOU which specifically states that even pending the implementation of the MOU, the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 will execute all documents, etc., to facilitate the dealing with such property so as to enable the Petitioners to raise the necessary finance required to discharge its obligations under the MOU. None of this has been altered by the SMOU. In fact, Clause 1 of the SMOU reiterates the MOU except where expressly varied.
17. Mr. Jagtiani has submitted that it has also been pleaded in the Statement of Defence that the Respondent Nos. 1 and 2 wrote letters to the Adani Group and the Petitioners objecting to the grant of development rights. The Adani Group issued a Public Notice on 20th January, 2021 and after which the Respondent Nos. 1 and 2 forwarded a Letter dated 2nd February, 2021 to the Advocate of Adani Group objecting to the redevelopment of the Mazgaon property. He has submitted that the Respondent Nos. 1 and 2 committed breach of its obligations under the MOU and SMOU and that there was lack of readiness and willingness on the part of Respondent Nos. 1 and 2. He has referred to the defence pleaded by the Petitioners in response to the Statement of Claim as well as the Application under Section 8 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc 31(6) of Respondent Nos. 1 and 2. He has submitted that the Arbitral Tribunal could not have passed the Interim Award without considering and deciding the defence raised by the Petitioners.
18. Mr. Jagtiani has submitted that it is a specific pleaded case of the Petitioners in the Statement of Defence as well as the Reply Affidavit to the Application under Section 31(6) filed by the Respondent Nos. 1 and 2 that the Respondent Nos. 1 and 2 breached their reciprocal obligations under the MOU and SMOU. He has placed reliance upon Paragraph 17 and 22 of the Statement of Defence of the Petitioners and Paragraph 36 of the Affidavit-in-Reply to the Application of Respondent Nos. 1 and 2 under Section 31(6) of the Arbitration Act.
19. Mr. Jagtiani has submitted that the Respondent Nos. 1 and 2 had not complied with their obligations under the MOU and SMOU viz. they interfered with the dealings in companies / firms / properties vested in the Petitioners under the MOU and SMOU. Further, the pleaded case of Respondent Nos. 1 and 2 and at the time of filing of the Written Statement to the Counter Claim is that they continued to remain partners / shareholders / owners in respect of 9 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Sumer Builders, Sumer Buildcorp Private Limited and Sumer Corporation (which otherwise vest with the Petitioners) and that the Petitioners had no authority to deal with these entities / properties. Further, the Respondent Nos. 1 and 2 failed to transfer their share, right, interest in Sumer Builders. It is only subsequently that the Respondent Nos. 1 and 2 retired vide Letter dated 8 th March, 2022 pursuant to an Order dated 8th March, 2022 passed in Commercial Appeal No.2 of 2022. This is also the case with Sumer Corporation where the Respondent Nos. 1 and 2 subsequently retired vide Letter dated 8th March, 2022 pursuant to an Order dated 8th March, 2022 passed in Commercial Appeal No.2 of 2022. In the case of Sumer Buildcorp Private Limited; Loonkar Developers Private Limited and Shah & Nahar Development the Respondent Nos. 1 and 2 subsequently transferred their share / right / interest in the said company vide Consent Interim Award No.6 dated 8 th February 2023. Further, there has been a failure to transfer the share / right / interest of the Respondent Nos. 1 and 2 in Sumermal H. Shah Family Trust (Mahim). There is also a failure to contribute Rs.10 Crores for the Fixed Deposit of Shree Laxmi Vallabh Parashwanth Trust (Bhinmal) and failure to contribute Rs.10 Crores for the Fixed Deposit of Sumermal H Loonkar Charitable Trust (Bhinmal). 10 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 :::
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20. Mr. Jagtiani has submitted that it is the categorical defence of the Petitioners that the Respondent Nos. 1 and 2 committed breach of their obligations under the MOU and SMOU. The breach by Respondent Nos. 1 and 2 goes to the root of readiness and willingness as well as on the question of entitlement of Respondent Nos. 1 and 2. Such breach shows the lack of readiness and willingness and disentitles the Respondent Nos. 1 and 2 to monetary reliefs more so without evidence led by the parties.
21. Mr. Jagtiani has submitted that the Arbitral Tribunal has noted that the Petitioners have discharged substantial liabilities taken over by them. He has submitted that the obligation of the Petitioners to pay amounts of Respondent Nos.1 and 2 under the SMOU is not unconditional and/or absolute. The MOU and SMOU contain reciprocal obligations which are dependent upon each other. The benefits under the MOU and SMOU to be received by the Respondent Nos. 1 and 2 is dependent upon Respondent Nos. 1 and 2 complying with their obligations. He has submitted that in the instant case, the Respondent Nos. 1 and 2 have not been complied with their obligations and in fact, breached the same.
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22. Mr. Jagtiani has submitted that although the Arbitral Tribunal in the impugned Interim Award comes to conclusion that there are alleged admissions to support the grant of a monetary award. However, when it comes to considering the defence to the making of this Interim Award, the Arbitral Tribunal in Paragraph 42 of the impugned Interim Award has in the context of the letter written by Respondent Nos. 1 and 2 to the Adani Group, not expressed any opinion but prima facie found that it does not appear that by writing a letter results in proving that the Respondent Nos. 1 and 2 and Respondent Nos. 3 and 4 were not ready and willing to perform their obligations under MOU and SMOU. Thus, the Arbitral Tribunal has not wished to adjudicate the question of breach of obligations by Respondent Nos. 1 and 2 and the question of lack of readiness and willingness. At the same time, the Arbitral Tribunal proceeded to express a prima facie opinion. He has submitted that no award could have been granted on the basis of any prima facie rejection of defence pleaded by the Petitioners.
23. Mr. Jagtiani has submitted that the Arbitral Tribunal completely ignored and failed to deal with the most basic defence of the Petitioners. In the face of this defence, it can never be said that 12 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc there is an unequivocal admission under principles of Order XII Rule 6 of the CPC to the grant of the monetary award. The Arbitral Tribunal has only expressed a prima facie view and this does not rule out the possibility that after evidence is led, the defence will indeed be established.
24. Mr. Jagtiani has submitted that the Arbitral Tribunal has failed to deal with the defence and not provided any reasons in respect of reciprocal obligations. He has submitted that this issue was also raised during oral submissions, which the Arbitral Tribunal has overlooked.
25. Mr. Jagtiani has submitted that the Arbitral Tribunal could never have on a piecemeal basis awarded the monetary amounts without considering the reciprocal obligations, the breach thereof by Respondent Nos. 1 and 2 and lack of readiness and willingness by Respondent Nos. 1 and 2. He has submitted that the Petitioners have a right to lead evidence which is a fundamental principle of natural justice more so given the fact that there is no clear unequivocal admission entitling the Respondent Nos. 1 and 2 to an Interim Award. He has placed reliance upon the decision of Delhi 13 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc High Court in Deepak v. Ramesh Sethi 1, wherein the Court has held that "the right to lead evidence is pivotal to a fair trial and partakes of the character of natural justice and fair play."
26. Mr. Jagtiani has submitted that even though in arbitral proceedings strict provisions of Evidence Act, 1872 and CPC, 1908 are not applicable and though the Tribunal is not bound by the provisions contained therein, the Tribunal is bound to consider the principles of Evidence Act, 1872 and the CPC, 1908 and has to follow the principles of natural justice. He has placed reliance upon the decision of this Court in Rashmi Housing Pvt. Ltd vs Pan India Infraprojects Pvt. Ltd 2 at Paragraph No.59 in this context.
27. Mr. Jagtiani has submitted that the Arbitral Tribunal has passed the impugned Award under provisions of Order XII Rule 6 of the CPC seeking Decree on Admission. It is the case of Respondent Nos. 1 and 2 that the Petitioners have made admissions in pleadings, warranting a Decree on Admission. He has submitted that the Respondent Nos. 1 and 2 have placed a piecemeal reliance on pleadings wherein the Petitioners admitted the existence and 1 2022 SCC OnLine Del 1321 2 2014 SCC Online Bom 1874 14 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc execution of the MOU and SMOU. He has submitted that neither in the Application for Interim Award nor in the Interim Award is there is a specific categorical admission that any sum of money is due and payable by the Petitioners to the Respondent Nos. 1 and 2. The kind of admission which may warrant an Application under Order 12 Rule 6 of the CPC is completely lacking in the present dispute. The Respondent Nos. 1 and 2 have based their case on three alleged admissions viz. (i) admission of the existence of the MOU & SMOU and that the Petitioners are also seeking specific performance of the MOU & SMOU; (ii) the admission that the parties have acted under the MOU & SMOU and there has been performance under the MOU & SMOU and (iii) the admission that this is a family settlement.
28. Mr. Jagtiani has submitted that the Petitioners have categorically and in unequivocal terms denied any liability whatsoever to pay Rs.42.65 Crores to the Respondent Nos. 1 and 2. It is the specific pleaded case of the Petitioners that no amount whatsoever is payable to the Respondent Nos. 1 and 2. He has placed reliance upon the Reply Affidavit to the Section 31(6) Application of the Respondent Nos.1 and 2, wherein the Petitioners have pleaded that they deny that the amount of Rs.89 Crores is any more payable 15 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc as alleged or otherwise.
29. Mr. Jagtiani has submitted that the impugned Award merely proceeds on the existence and execution of the MOU and SMOU while passing a Decree on Admission for Rs.42.65 Crores. This has completely disregarded the pleadings filed and the defences urged by the Petitioners. He has submitted that the admission in pleading must be read as a whole or not at all. There cannot be a piecemeal reading of pleading to pass an Interim Award against the Petitioners. He has in this context placed reliance on the Judgment of this Court in Western Coalfields Limited v. Swati Industries 3, in particular Paragraphs 4 and 5 of the said Judgment. He has further placed reliance upon the Judgment of this Court in Sphere International v. Ecopack India Paper Cup Private Limited 4. He has submitted that the decision of the learned Single Judge of this Court in Sphere International (supra) has been upheld by the Division Bench of this Court by Judgment dated 14 th March, 2018 in Appeal No.101 of 2018.
30. Mr. Jagtiani has submitted that the other inconsistency 3 AIR 2003 Bom 369 equivalent to 2003 SCC OnLine Bom 148 4 Judgment dtd .21/12/2017 in Notice of Motion No. 2059 of 2017 16 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc and patent error in the Interim Award is that when it comes to dealing with the issue of limitation as has been done in Paragraph 32, 34 and 35, the Tribunal saves the period of limitation for the monetary claims by referring to the performance and the conduct of the parties in respect of other aspects of the MOU. If the monetary claims were looked at on a standalone basis, then under Article 54 of the Limitation Act, 1963 the defence is that the monies were due on 30th September 2016 and the three-year period of limitation would expire on 30th September 2019 and the notice invoking arbitration is after that. The Arbitral Tribunal for the purposes of limitation has looked at the MOU as one composite whole and the Tribunal relies upon conduct in performance of the MOU after the date of 2016. The Tribunal has held that it is the conduct which saves the period of limitation or extends the period of limitation.
31. Mr. Jagtiani has submitted that inconsistent with this approach of looking at the MOU as a composite whole is the approach taken by the Tribunal in considering the merits of the Interim Award Application for grant of monetary payments. In that aspect of the matter, the Tribunal in various places says that where an Application for Interim Award is made and that part of the MOU & 17 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:18 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc SMOU does not require any leading of evidence or disputed questions, the Tribunal can grant it on a piecemeal basis. It is on that logic that the Tribunal considers only the payment obligation without considering the corresponding obligations which constitute the reciprocal promises / Counter Claim, namely, the attempt on the part of Respondent Nos. 1 and 2 in undermining or jeopardizing the dealings with the Mazgaon property.
32. Mr. Jagtiani has submitted that as per Clause 5(b) of the SMOU, the sum of Rs.89 Crores was to be paid by 30 th September, 2016. Thereafter, disputes arose between the parties. In January 2021, the Respondent Nos. 1 and 2 breached its obligations under the MOU and SMOU inter alia by jeopardizing the Adani deal in regard to the Mazgaon Property. The parties were referred to arbitration by an Order of 8th April 2021. The Statement of Claim was filed on 16 th August 2021. The Statement of Defence was filed by the Petitioners on 25th September, 2021 inter alia raising the defence of breaches committed by the Respondent Nos. 1 and 2 and lack of readiness and willingness. The Petitioners further filed a Counter Claim. The Application under Section 31(6) was filed by the Respondent Nos. 1 and 2 on 17th December, 2021 viz. after 5 years from the date 18 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc mentioned in the SMOU and after breaches being committed by the Respondent Nos. 1 and 2 and defence being filed by the Petitioners.
33. Mr. Jagtiani has submitted that the Affidavits relied upon by the Respondent Nos. 1 and 2 only contain an admission of the Petitioners on the execution and existence of the MOU and SMOU. They do not contain any admission of liability.
34. Mr. Jagtiani has submitted that the submissions made and decisions relied upon by the Respondent Nos. 1 and 2 overlooks the basic contention of the Petitioners that the Interim Award is passed without considering and deciding the defence to the claim of the Respondent Nos. 1 and 2. This defence is independent from the counter claim and even de hors the counter claim, and hence, the Arbitral Tribunal was required to adjudicate the defence before granting any Interim Award. He has submitted that the present Interim Award suffers from perversity as well as patent illegalities as the Tribunal has given a go bye to the settled law inasmuch as the Tribunal has proceeded to decide the 31(6) Application without considering the defences raised by the Petitioners and without providing reasons for not considering the defences of the Petitioners. 19 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 :::
CARBP(L) 10500.2023 with IA(L) 13398.2023.doc He has submitted that the present case is an exceptional, unique and compelling case for an unconditional stay of the Interim Award. He has placed reliance upon the decision of this Court in Alkem Laboratories Ltd V/s. Issar Pharmaceuticals Pvt Ltd.5 in this context.
35. Mr. Ashish Kamat, learned Senior Counsel appearing for the Respondent Nos. 1 and 2 has submitted that it is the settled position of law that the ordinary rule is to direct the party seeking stay of the Arbitral Award to deposit the entire awarded amount i.e. principal and interest. An exception to the rule is carved out in extremely exceptional circumstances. For making out a case of unconditional stay or stay in derogation to the established rule of 100% deposit the Petitioners have to not only make out a case for admission but also exceptional circumstances which would warrant the exercise of discretion in favor of the Petitioners. The Petitioners have miserably failed to make out a case for admission as for stay of the impugned Arbitral Award. This is especially so as the present case relates to the performance of a family settlement and where the 5 Order dtd 5/2/2024 in Interim Application No.377 of 2024 in Commercial Arbitration Petition No.389 of 2023 20 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Petitioners have taken the entire benefit of the family settlement.
36. Mr. Kamat has referred to the facts in the matter as well as the fact that the disputes and differences between the three family groups being settled by the the execution of the family settlement as evident by the MOU and SMOU. The dispute and differences which have been adjudicated by the Arbitral Tribunal arise out of this family settlement.
37. Mr. Kamat has referred to the prior proceeding including Section 9 Arbitration Petition filed by Respondent Nos. 3 and 4 as well as reply to the Arbitration Petition, wherein the Petitioners have taken a stand that Respondent Nos.3 and 4 could not rely upon the terms of the Deeds of Reconstitution of Partnership dated 1 st April, 2015 and 27th March, 2015 in view of the settlement arrived at between the family members as recorded in the Family Settlement.
38. Mr. Kamat has submitted that the stand of the Petitioners before this Court at the threshold and first opportunity was to contend that the family settlement was a complete settlement between the parties and that the rights and obligations of the three family groups were only to be governed by the family settlement and 21 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc that the Petitioners were willing to fulfill their obligations under the family settlement.
39. Mr. Kamat has also referred to the Commercial Suit No.319 of 2020 filed by Respondent Nos. 1 and 2 upon becoming aware that the Petitioners had forged the signature of members of Respondent Nos. 1 and 2 creating and obtaining financial facilities and thus, the Suit was filed to impugn the transaction documents. He has placed reliance upon Affidavit-in-Reply to the Interim Application taken out by Respondent Nos. 1 and 2 in the Suit, wherein the Petitioners sought to take shelter of the family settlement. He has relied upon the Order dated 22 nd November, 2021 passed by this Court in Interim Application No.1370 of 2020, wherein, this Court found the Petitioners' Group acted contrary to the terms of the family settlement. The Petitioners' Group had relied on different versions of the same document which allegedly bore the signatures of Respondent Nos.1 and 2.
40. Mr. Kamat has submitted that the prior proceedings and order passed therein demonstrates that at all material times the Petitioners accepted the family settlement and professed that they 22 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc were willing to honour the same.
41. Mr. Kamat has submitted that the present Arbitration Petition ought to be considered in the conspectus of facts and factors including that the documents in respect of which specific performance has been sought is a family settlement. All three groups have sought specific performance of the family settlement. The existence, execution, validity, subsistence, binding nature and the terms of the family settlement have admitted by the Petitioners. The Petitioners have admitted that the parties have acted upon the family settlement, have taken benefits under the family settlement and steps for implementation thereof have been and continue to be taken. The Petitioners have stated in the pleadings that they have been, and continue to be ready and willing to abide by the terms of the family settlement and to execute such other and further documents as may be required for effecting transfers in terms of the family settlement. The Petitioners have also, sought specific enforcement of the Family Settlement.
42. Mr. Kamat has submitted that on a plain and complete reading of the pleadings and Affidavits filed by the Petitioners, it is 23 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc demonstrably apparent that there are unequivocal and unambiguous admissions which justify and warrant the passing of an Interim Award. The Petitioners by seeking enforcement of the family settlement have held themselves out and bound themselves to perform all their obligations under the family settlement (including the monetary obligations) without any reservation or precondition. This has been correctly appreciated by the Learned Arbitrator.
43. Mr. Kamat has submitted that apart from any unambiguous admissions contained in the Affidavits in pleadings filed by the Petitioners and in addition to an Award for specific performance prayed for by the Petitioners, the Petitioners themselves had filed an Application for an Interim Award before the Arbitral Tribunal. The filing of an Application for Interim Award by the Petitioners is a complete and unambiguous admission by the Petitioners that an award on admission could be and ought to be passed by the Arbitrator at the interim stage, and the same constitutes a complete estoppel against the Petitioners from contending otherwise and/or making any resistence to perform any part of their obligations (including, financial) under the family settlement.
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44. Mr. Kamat has submitted that the family settlements are governed by a special equity peculiar to themselves. The Courts lean in favour of upholding family arrangements instead of disturbing the same on technical or trivial grounds. A party who has acted upon and taken benefits under a family arrangement is estopped from disputing its enforceability. He has submitted that the conduct of the Petitioners during the course of the proceedings is malafide and fraudulent.
45. Mr. Kamat has submitted that the Respondent Nos.1 and 2 have performed all their obligations under the family settlement by executing the necessary retirement deeds, share transfer forms and resignation letters to effectuate the family settlement. The Statement of Defense contains vague and evasive denials and does not answer the point of substance. He has submitted that such vague and unparticularized plea / denials are of no legal consequence and do not afford any defence to the Petitioners. He has placed reliance upon decision of the Supreme Court in Gian Chand & Brothers V/s. Rattan Lal 6 at Paragraphs 2, 3, 6, 7, 8 to 11 and 14 and 23 to 26 in this context.
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46. Mr. Kamat has submitted that the stand and pleas taken by the Petitioners are inconsistent, self-contradictory and taken as an afterthought. By seeking specific performance of the family settlement, the other contentions and pleas of the Petitioners ought to be considered in that context and such allegations and pleas would not come in the way of the learned Arbitrator passing an Interim Award.
47. Mr. Kamat has submitted that the defence taken by the Petitioners in respect of the Respondent Nos. 1 and 2s' Application for Interim Award were moonshine and ex-facie unsustainable. The arguments of the Petitioners with respect to readiness and willingness and reciprocal promises are equally misconceived. Once the Petitioners have sought specific performance of the family settlement, even in the absence of the readiness and willingness at the end of Respondent Nos.1 and 2, Respondent Nos.1 and 2 would be entitled for specific performance. Further, Respondent Nos.1 and 2 have already complied with all their obligations under the family settlement and there is no question of any reciprocal obligation remaining outstanding at the end of Respondent Nos.1 and 2. Hence, this submission is also unfounded.
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48. Mr. Kamat has submitted that the impugned Interim Award has been passed only in respect of such claims where no evidence is required to be lead and where no trial is required to be held. Wherever the learned Arbitrator found that a trial was required or some evidence was required to be led, the Learned Arbitrator has not granted an Interim Award.
49. Mr. Kamat has submitted that it is settled law that an Award on admission can be passed on the basis of admissions contained either on the pleadings or otherwise. The principles behind Order XII Rule 6 are to give the Plaintiff a right to speedy Judgment. The provision is wide and admission can be inferred from the facts and circumstances of the case. A Judgment on admission can be passed on part of the claim. Purported grounds / defences which are palpably misconceived, dishonest and vague can never afford a sound basis to resist such an application. He has placed reliance upon the decisions of the Supreme Court in Karam Kapahi & Ors. V/s. Lal Chand Public Charitable Trust & Anr. 7 Paragraphs 24, 34D, 37 to 41, 47, 49 to 54 and in SRL Ltd. V/s. Techtrek India Ltd.8 at Paragraphs 2, 3, 6, 7, 8 to 11 and 14.
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50. Mr. Kamat has submitted that the scope of interference in a Petition under Section 34 is extremely narrow and restricted. The Section 34 Court ought to refrain itself from appreciation and re- appreciation of matters of fact as well as law. Perversity is available as a ground of challenge under the ground of patent illegality covered under Section 34(2)(A) of the Arbitration Act and such patent illegality must appear on the face of the Award and must go to the root of the matter. Erroneous application of the law does not amount to patent illegality or perversity. The quantity and quality of evidence falls within the exclusive domain of the Arbitrator and the Court under Section 34 cannot re-appreciate the same. He has placed reliance on the decision of the Supreme Court in Delhi Airport Metro Express Pvt Ltd V/s DMRC 9 at Paragraphs 27 to 31 and Sangyong 10 Engineering and Construction Company Ltd V/s. NHAI at Paragraph Nos.34 to 41.
51. Mr. Kamat has submitted that none of the grounds raised by the Petitioners satisfy the requirement of interference with an Arbitral Award. The grounds raised by the Petitioners are factual and at the highest can be said to be grounds alleging erroneous 9 (2022) 1 SCC 131 10 (2019) 15 SCC 131 28 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc application of the law. Such grounds are not available as grounds of challenge.
52. Mr. Kamat has submitted that the contentions of the Petitioners that the impugned award has considered the defence of the Petitioners on a prima facie basis is misconceived, erroneous and not a correct construction of the Award. He has submitted that the Petitioners raised a defence for objecting to the passing of an Interim Award on the basis that Respondent Nos.1 and 2 were in breach of their obligation under the Family Settlement by allegedly addressing a notice dated 2nd February, 2021 to the Adani Group thereby disrupting the transaction. On this basis a Counter Claim for damages has been made by the Petitioners. The Petitioners have sought specific performance of the family settlement. Its claim for damages is specifically in addition to and not in lieu of specific performance. In any event, the claim for damages is unsubstantiated and unliquidated; is (as a matter of law) required to be proved; and as such, does not come in the way of being required to honour an admitted obligation and liability by way of specific performance of the family arrangement. He has placed reliance upon Union of India 29 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc V/s Raman Iron Foundry 11 at Paragraphs 1, 4B, 7, 9, 10, 11 and Suraj Sanghi Finance v/s. Credential Finance 12 at Paragraph 5 and Reliance Project Ventures & Management Pvt. Ltd. V/s. ECL Finance Ltd. & Ors. 13 at Paragraph 37.
53. Mr. Kamat has submitted that the defence of the Petitioners on breach of the family settlement by Respondent Nos.1 and 2 is a red-herring. In any event, the monetary obligations of the Petitioners are crystalized and a term of the Family Settlement. This cannot be equated with a claim for unliquidated damages. Assuming (whilst denying) that the Petitioners made out a case for the whole or part of the damages claimed; such an award would be independent of the award rendered in favor of Respondent Nos.1 and 2 and does not affect the same in any manner. The Counter Claim for damages does not in any manner affect Respondent Nos.1 and 2 application for Interim Award. Further, the Award has to be read in its entirety and Paragraph 42 of the Interim Award is specifically to be read with Paragraph 50 of the impugned Award which clearly sets out the reasons for the learned Arbitrator in not finally adjudicating the 11 (1974) 2 SCC 231 12 2002 (4) Mh.L.J.770 13 2019 SCC OnLine Bom 6781 30 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Petitioners Counter Claim.
54. Mr. Kamat has submitted that the execution of documents to deal with properties was to generate revenue to discharge the Sumer Group debt. This obligation to discharge the Sumer Group debt was distinct and independent from the obligation of the Petitioners to pay the crystalized sum of Rs.89 crores. The plea that raising of finances in terms of Clause 2(a) was also to enable the Petitioners to pay the amount of Rs.89 crores was not taken in the pleadings nor was any such argument made during the arbitration proceedings. This argument thus cannot be countenanced in a Petition under Section 34. Further, the Petitioners have chosen not to challenge the interim award passed in favour of Respondent Nos.3 and 4 which makes it abundantly clear that the said contention is misconceived, malafide and taken as an afterthought.
55. Mr. Kamat has submitted that the Petitioners' contention that on account of breach of the reciprocal obligations by Respondent Nos.1 and 2, there has been a repudiatory breach, is not only contrary to the record but is also contrary to law. The said contention cannot be countenanced in the face of Section 39 of the Indian 31 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Contract Act, 1872. In the event of a purported repudiatory breach, the Petitioners had two options i.e. either to repudiate / terminate the contract or to continue with the contract with the breach. The Petitioners have admittedly not elected to terminate the contract and have sought specific performance of the contract. The Petitioners are thus not entitled to raise the defence of an alleged breach by Respondent Nos.1 and 2 as a defence to the performance of their obligations.
56. Mr. Kamat has submitted that a lot of water has flown under the bridge from the institution of the arbitration proceedings. Parties have by consent performed a number of their obligations under the family settlement. Such performance has resulted in 6 Interim Awards being passed by the learned Arbitrator by which steps taken to further implement the family settlement were taken.
57. Mr. Kamat has submitted that the Petitioners' contention that there is no admission on the monetary obligation of the Petitioners, is contrary to law and pleadings on record. The admissions contained in the pleadings and Affidavits filed by the Petitioners is as regards the performance of the family settlement. 32 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 :::
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58. Mr. Kamat as submitted that the argument of the Petitioners that there are reciprocal obligations and that the Petitioners are not required to fulfill their monetary obligations till such time as the Respondents obligations are fulfilled is another red herring. There is nothing in the family settlement to suggest that the performance of the Petitioners financial obligation is posited on performance of any other obligations. Second, the Petitioners own conduct belies its present stand. This is because, the Petitioners have claimed to have made part payments towards their obligation. Only, the quantum is in dispute. Third, having sought specific performance, the Petitioners have impliedly stated their willingness to perform their obligation. Lastly the Petitioners have not stated what is the alleged reciprocal obligation that it seeks performance of. This is because, there is none.
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59. Mr. Kamat has submitted that a decree for specific performance is in favor of both the Plaintiff and the Defendant. In that context he has placed reliance upon the decision of the Supreme Court in Hungerford Investment Trust Ltd. vs. Haridas Mundhra 14 at Paragraph 31. The Petitioners have agreed and understood that their obligation to pay Rs.89 crores under the family settlement is irrevocable. The Petitioners have in part performance paid an amount of Rs.16.025 crores. According to the Petitioners, they have paid an amount of Rs.46.025 crores. The Petitioners had no defence whatsoever with respect to payment of the balance of Rs.42.65 crores.
60. Mr. Kamat has dealt with the Petitioners' contention that the family settlement is barred by limitation by submitting that the Petitioners ought not to be permitted and this Tribunal ought not to countenance the defence of limitation whilst considering the grant of reliefs which would give effect to a family settlement which are governed by a special equity peculiar to themselves. He has placed reliance upon the decision of the Supreme Court which held that the plea of limitation is not available in cases of implementation of family 14 (1972) 3 SCC 684 34 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc settlement. Such settlements are essential for maintaining peace and harmony in a family. These decisions are Kale & Others Vs. Deputy Director of Consolidation & Ors.15 at Paragraphs 9, 10, 15, 20, 24, 33, 34 and 42 and Hari Shankar Singhania & Ors. Vs. Gaur Hari Singhania & Others 16 at Paragraphs 42, 43, 45, 47 to 53.
61. Mr. Kamat has submitted that that the plea of limitation is ex-facie misconceived, legally untenable and liable to be rejected as the Petitioners have maintained that the family settlement is valid and binding till date. They have expressed their willingness to perform the family settlement and called upon Respondent Nos.1 and 2 to perform the family settlement. It is Petitioners' own case that performance of the family settlement is an ongoing exercise. The Petitioners have been part performing the family settlement in the years 2017, 2018 and lastly in 2019. Thus, there is no merit in the plea of limitation taken by the Petitioner.
62. Mr. Kamat has submitted that the Judgments relied upon by the Petitioners are clearly distinguishable as the Judgments are not in context of a family settlements and further, they are not in a 15 (1976) 3 SCC 119 16 (2006) 4 SCC 658 35 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc situation where the Defendants have also sought for specific performance of the self-same agreement of which the Plaintiffs have sought specific performance.
63. Mr. Kamat has submitted that the Petitioners have miserably failed to make out any case for admission of the Petition. Further, the Petitioners cannot escape the rigors of Section 36 and claim an unconditional stay of the Arbitral Award. No exceptional circumstances have been made out by the Petitioners warranting grant of such a stay. There has been a consistent view of this Court after taking into consideration of the Judgments passed by the Supreme Court that a stay to the Arbitral Award can be granted only upon deposit of the entire awarded amount. He has placed reliance upon the deision of this Court in M/s Balmer Lawrie & Co. Ltd v/s. M/s Shilpi Engineering Ltd. 17. He has distinguished the decision of the learned Sinlge Judge of this Court viz. Sphere International (supra) and the Judgment passed in Appeal from the said order in Ecopack India Paper Cup Pvt Ltd (supra) relied upon by the Petitioner as being prior to the law laid down in the Supreme Court in Toyo 17 Interim Application (L) No.779/2023 in CARBP No.1131/2018 36 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Engineering Corporation & Anr. V/s. Indian Oil Corporation Limited 18 . In the cases relied upon by the Petitioner, the admission on the basis of which an Award on admission was passed were clearly conditional in nature and the same were linked to the claim of the Respondent in the arbitration proceedings and could not said to be unconditional admissions. Further, the underlying legal principle in Alkem Laboratories Ltd (supra) . In that case, the Learned Arbitrator passed an Award for damages without the Claimant proving actual damages. This Court had came to the conclusion that the award suffered from perversity as well as certain illegalities and had given a complete go by to the settled principles of law. In such circumstances, the Court granted respite to the Petitioners from depositing the awarded amount. The present proceedings are in relation to a crystalized sum recorded in a Family Settlement which is clearly distinguishable from that case where the award of damages was against settled principles of law. This decision would in fact show that a claim of damages can never come against / afford a defence to payment of an undisputed debt.
64. Mr. Kamat has accordingly submitted that there is no 18 2021 SCC Online SC 3455 37 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc merit in the submissions of the Petitioners for grant of unconditional stay of the impugned Award . Further, the Arbitration Petition makes no valid ground under Section 34 of the Arbitration Act warrenting admission and accordingly, the same should be dismissed.
65. Having considered the rival submissions, in my view, it would be necessary to consider the relevant clause in the MOU which is Clause 2(a) of the MOU which reads as under:
"Clause 2(a) of the MOU provides complete autonomy to the RSS Group to deal with the properties 'as they may deem fit'. This, obviously, includes the discretion to use the proceeds to pay the BKS Group. This understanding is also accepted by the BKS Group as is evident from their Statement of Claim. In the Statement of Claim, it is the pleaded case of the BKS Group that the proceeds from the Santacruz property and Mazgaon property were to be used to clear liability of the Sumer Group and pay monetary consideration payable to the BKClause 2(a) of the MOU provides complete autonomy to the RSS Group to deal with the properties 'as they may deem fit'. This, obviously, includes the discretion to 38 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc use the proceeds to pay the BKS Group. This understanding is also accepted by the BKS Group as is evident from their Statement of Claim. In the Statement of Claim, it is the pleaded case of the BKS Group that the proceeds from the Santacruz property and Mazgaon property were to be used to clear liability of the Sumer Group and pay monetary consideration payable to the BKS Group19. While referring to the board resolutions dated 1st September 2014 and 6th September 2014, the BKS Group have pleaded "...The proceeds from the sale of units were to be used towards clearing the liabilities of the Sumer Group and paying the monetary consideration payable to Bharat Group and Loonkar Group." (emphasis supplied)"
66. It is apparent from Clause 2(a) of the MOU that the Petitioners had complete autonomy to deal with the said properties as they may deem fit and in the event of sale of the said properties the proceeds therefrom were not only confined to the discharge of the liabilities of the Sumer Group but could also be utilized towards the 19 Para 32 and 33 of Statement of Claim at Page 335 and 336 of COD - 2 39 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc payment of monetary consideration to the Respondent Nos. 1 and 2 under Clause 3 of the SMOU. Further, this was also the understanding of the Respondent Nos. 1 and 2 as can be seen from the Board Resolutions dated 1st September, 2014 and 6th September, 2014 where the Respondent Nos.1 and 2 have stated that the proceeds from the sale of Units were to be used towards clearing the liabilities of the Sumer Group and paying the monetary consideration payable to the Bharat Group (Respondent Nos. 1 and 2 Group) and Loonkar Group (Respondent Nos. 3 & 4) Group
67. Thus, the obligations under the MOU and SMOU were inextricably linked to each other. I find that these obligations are not independent to each other, but are reciprocal obligations. Further, it was necessary for the Arbitral Tribunal to consider the defence of the Petitioners to the Application for Interim Award filed by the Respondent Nos. 1 and 2 under Section 31(6) of the Arbitration Act particularly, where the defence of the Petitioners is of breach of reciprocal obligations under the MOU and SMOU committed by the Respondent Nos. 1 and 2 and which also went to the lack of readiness and willingness of Respondents Nos. 1 and 2. This defence can be seen from the Reply Affidavit of the Petitioners to the 40 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Application under Section 31(6) of the Arbitration Act, where the specific pleaded case of the Petitioners as to the Respondent Nos. 1 and 2 having breached their reciprocal obligations under the MOU and SMOU has been raised. Reference is made to Paragraph 17, 22 to the Statement of Defence and Paragraph 36 of the Affidavit-in- Reply to the Application under Section 31(6) in the context.
68. I prima facie find from the impugned Interim Award that though the Arbitral Tribunal has recorded the defence of the Petitioners viz. that the Respondent Nos. 1 and 2 had breached their reciprocal obligations under the MOU and SMOU, the Arbitral Tribunal has failed to deal with this defence which in my prima face view amounts to a patent illegality in impugned Interim Award, as without a finding on such defence, the impugned Award has granted monetary reliefs. Further, in order to determine the issue raised by the Petitioners on breach of reciprocal obligations, it was encumbant on the Arbitral Tribunal to allow evidence to be led on such issue. The Arbitral Tribunal may not be bound by the Evidence Act and CPC, however, the Tribunal is bound to consider the principles of the Evidence Act and CPC and to follow the principles of natural justice. The decision relied upon by Mr. Jagtiani for the Petitioner viz. Rashmi 41 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Housing Pvt. Ltd vs Pan India Infraprojects Pvt. Ltd .(supra) is apposite.
69. The Arbitral Tribunal has without considering the aforementioned defence raised by the Petitioners come to a conclusion that there are admissions to support the grant of the monetary award. It is necessary to refer to Paragraph 42 of the impugned Award which reads as under:
"42. In my opinion, the arguments advanced by Ramesh Shah Group are in desperation to avoid passing of an interim award. As seen from what is extracted above, Ramesh Shah Group has not only admitted the family settlement as recorded in MoU and SMoU, but Ramesh Shah Group itself is seeking performance thereof against another two groups. In a peculiar fact of this case where all the three parties admit the record of the family settlement in MoU and SmoU and in addition thereto each group wants the other groups to perform their respective obligations. This alone to my mind is the existence of jurisdictional facts for the purpose of granting interim award. Again the family settlements are 42 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc governed by special equities and the attempt should always be to uphold the family settlements instead of defeating it. In support of the contention that Bharat Shah Group and Loonkar Group are not ready and willing a letter written to Adani Group by them was sited. I do not wish to [express] any opinion but prima facie it does not appear that by writing the letter results in proving that Bharat Shah Group and Loonkar Group were not ready and willing to perform their obligations under MOU and SMOU. Even otherwise much water has flown under the bridge. Ramesh Shah Group has the control of major assets and have discharged liabilities of the group in terms of MOU and SMOU. So if Ramesh Shah Group desires to continue to enjoy the fruits of MOU and SMOU it cannot defeat discharge of some of the obligations to the other two groups. It is not the case of Ramesh Shah group that it is willing to go back to pre- MOU and SMOU stage. It is, therefore, inevitable that interim award be passed to the extent possible. The family settlement are different species of contract and are required to be approached from an angle where its 43 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc validity and sanctity is upheld and is not subjected to the technical rules to defeat performance thereof. Ramesh Shah Group having run out of any answer to resist the present Application have adopted this approach to delay passing of an interim award against them. I, therefore, reject the contention of Ramesh Shah Group. (emphasis supplied)"
70. The Arbitral Tribunal though noting the defence raised by the Petitioners has only expressed an opinion that Respondent Nos. 1 and 2 by writing a letter to the Adani Group, prima facie it does not appear that they were not ready and willing to perform their obligations under the MOU and SMOU. However, the Tribunal has failed to consider whether there were reciprocal obligations of the parties to the MOU and SMOU. The Tribunal has in my prima facie view read the SMOU on a piecemeal basis by awarding monetary amounts without considering the reciprocal obligations and the allegation of breach thereof by the Respondent Nos. 1 and 2 and their lack of readiness and willingness.
71. Further, in my prima facie view there does not appear to 44 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc be an unequivocal admission on the part of Respondent Nos. 1 and 2 as to their liability to pay the monetary amounts to the Respondent Nos. 1 and 2 which would warrant a Decree on Admission under Order XII Rule 6. I find much merit in the submission of Mr. Jagtiani that there is piecemeal reliance by the Arbitral Tribunal on pleadings where the Petitioners have admitted the existence and execution of the MOU and SMOU. Further, the Petitioners seeking specific performance of the MOU and SMOU and their acting under the MOU and SMOU as well as the MOU and SMOU amounting to family settlement seems to be the fundamental basis for passing of the impugned Award. However, the Arbitral Tribunal has overlooked that the Petitioners have categorically and in unequivocal terms denied any liability whatsoever to pay Rs.42.65 Crores to the Respondent Nos. 1 and 2. This can be seen from the Reply Affidavit to the Section 31(6) Application of Respondent Nos. 1 and 2.
72. I do not find merit in the submission of Mr. Kamat for Respondent Nos. 1 and 2 that merely because the Petitioners have sought performance of the MOU and SMOU in the counterclaim and that the MOU and SMOU being a family settlement and acted upon are sufficient reasons for the Arbitral Tribunal to pass a Decree on 45 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Admission under Order XII Rule 6 of the CPC. The reliance placed by Mr. Kamat on the words "either on pleadings or otherwise" in the said Order XII Rule 6 to contend that it is wide and admissions can be inferred from the facts and circumstances of the case does not apply to the present case. For awarding the monetary amount to Respondent Nos. 1 and 2 as a Decree on admission, it was imperative for the Arbitral Tribunal to consider whether the Respondent Nos. 1 and 2 have established that there was an unequivocal admission on the part of the Petitioners of their liability to pay the monetary amount to the Respondent Nos. 1 and 2. I do not prima facie find any such admission and / or that the defence raised by the Petitioners is in any way misconceived, dishonest and vague to resist such an Application under Section 31(6) of the Arbitration Act.
73. The issue on limitation for the monetary claims is not necessary to be considered in view of the aforementioned prima facie finding that there is patent legality in the impugned Award by not considering the defence of the Petitioner viz. breach of reciprocal obligations under the MOU and SMOU 46 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc committed by the Respondent Nos. 1 and 2 group and their lack of readiness and willingness.
74. The learned Arbitrator in Paragraph 50 of the impugned Award has expressed an opinion that merely because the party has made a claim for damages, this would not prevent the Arbitral Tribunal from granting the interim Award in respect of obligations to be performed by the parties under the family settlement. This opinion expressed by the Arbitral Tribunal has in my prima facie view overlooked the contention of the Petitioners that the breaches committed by Respondent Nos. 1 and 2 were of reciprocal obligations and such defence raised by the Petitioners was necessary to be considered prior to the passing of an interim Award granting the monetary amount to the Respondent Nos. 1 & 2 as the monetary amounts would be payable by the Petitioners provided that there had been no breach by the Respondents of their reciprocal obligations. The Arbitral Tribunal has by referring to the counter claim for damages failed to consider the defence of the Petitioners in the proper perspective and hence, in my prima facie view such an opinion expressed by the learned Arbitrator suffers from perversity. 47 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 :::
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75. The submission of Mr. Kamat that the Petitioners having made part payment of Rs.46.36 Crores out of Rs.89 Crores payable to Respondent Nos. 1 and 2, there is an admission of liability to pay the balance amount of Rs.42.65 crores, is untenable. The Arbitral Tribunal has not passed the interim Award on the basis of part payment made by the Petitioners. The Arbitral Tribunal has not held that such payment amounts to admission of liability. The reference to such part payment is only in Paragraph 57 of the interim Award for arriving at the balance amount payable to the Respondent Nos. 1 and
2. Thus, this contention amounts to supplying reasons and supplanting the Interim Award which is impermissible in law.
76. The reliance placed by Mr. Kamat on Consent Interim Awards taken by the parties to contend that the Petitioners cannot now oppose the impugned Interim Award is of no merit. There is no reference to the Consent Interim Awards in the impugned Interim Award and further the consent Interim Awards are not the basis of passing the impugned Interim Award. Once again by these contentions, there is an attempt by the Respondent Nos. 1 and 2 to supply reasons where there are no reasons in the impugned Interim Award.
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77. The contension of Mr. Kamat that the Petitioners by not challenging the very same Interim Award in favour of the Respondent Nos. 3 and 4, cannot now challenge the impugned Award in favour of the Respondent Nos. 1 and 2, is in my view misconceived. The Interim Award in favour of the Respondent Nos. 3 and 4 is a separate and distinct Award. The Petitioners and Respondent Nos. 3 and 4 appear to be in the process of settling their inter se disputes. The Respondent Nos. 1 and 2 cannot use such a settlement as a defence to the impugned Interim Award. Thus, in my view the Petitioners are entitled to challenge the impugned Interim Award of the Respondent Nos. 1 and 2 Group under Section 34 of the Arbitration Act.
78. It is pertinent to refer to the decision of this Court in Board of Control for Cricket in India v. Deccan Chronicle Holdings Limited20., wherein this Court has held that it is entirely impermissible for a party to supply the reasons an Award is supposed to have.
79. The decisions which have been relied upon by Mr. 20 2021 SCC Online Bom 834 49 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Kamat are in my view, confined to the facts in those cases and are inapplicable to the present case where I have prima facie held that the impugned Interim Award has been passed without deciding the defence of breaches of reciprocal obligations committed by the Respondent Nos.1 and 2 and which goes to the root of their readiness and willingness. This would include the decisions on family settlement, which in my prima facie view are inapplicable, particularly in a case where a Decree on Admission under Order XII Rule 6 of the CPC is being sought and for which unequivocal admission of the Petitioners liability to pay Respondent Nos. 1 & 2 the monetary amounts in the present case would be required to be established for passing such monetary decree. This, given my prima facie finding that the impugned Interim Award lacks reasons and fails to consider the defences raised by the Petitioners herein.
80. Thus, I prima facie find that the impugned Interim Award suffers from perversity as well as patent illegality and has given a go by to the settled law in as much as Arbitral Tribunal has passed the impugned Interim Award as a Decree on 50 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 ::: CARBP(L) 10500.2023 with IA(L) 13398.2023.doc Admission under Order XII Rule 6 of the CPC in the Section 31(6) Application without considering the defences raised by the Petitioners and without providing reasons for not considering the defences of the Petitioners.
81. Accordingly, this is an exceptional, unique and compelling case for an unconditional stay of the impugned Interim Award.
82. The Interim Application is allowed in terms of prayer Clause 'a'. Accordingly, the effect, implementation and enforcement of the impugned Interim Award dated 15th December, 2022 duly corrected by the Order dated 23 rd December, 2022 passed by the Arbitral Tribunal is stayed.
83. The Interim Application is accordingly disposed of.
84. In view of this order, the Commercial Arbitration Petition (L) No.10500 of 2023 is admitted and hearing expedited.
[ R.I. CHAGLA, J. ] 51 ::: Uploaded on - 08/05/2024 ::: Downloaded on - 10/05/2024 00:42:19 :::