In a significant ruling by the Supreme Court of India, a judgement has been passed in the case of The Ruias v. MHL. This case involved a complex legal dispute revolving around the entitlement to shares and the validity of a Settlement Agreement. The Court’s decision has far-reaching implications on the rights and obligations of the parties involved.
Facts
- The matter was adjourned for hearing on multiple dates and finally taken up on 13.12.2019.
- The Division Bench overturned the order of the Single Judge, stating that the right to sue arose for MHL on 14.10.2005 when the Settlement Agreement dated 05.12.2002 was made available.
- The appellants, the Ruias, challenged the Division Bench’s decision through an appeal before this Court.
- This appeal was a result of the Commercial Appeal No.148 of 2017 in Suit No.2410 of 2008.
- The Single Judge allowed the petition filed by the appellants-Ruias by holding that MHL is a stranger to the Settlement dated 05.12.2002.
- The cause of action arose to MHL on 24.08.2002, when MHL was impleaded as a defendant in Suit No. 2499 of 1999 through Chamber Summons No. 455 of 2002.
- In Suit No. IV-2410 of 2008, Ruias and MGG agreed not to prosecute proceedings against each other but would pursue proceedings against MHL and GGL.
- Various rounds of litigations have taken place, including Suit No. I-1810 of 1998, Suit No. II-2499 of 1999, Suit No. III-509 of 2001, and Suit No. IV-2410 of 2008.
- MHL filed Suit IV-2410 of 2008 to cancel the Settlement Agreement dated 05.12.2002 through which 75,001 shares of BOIL were transferred to Ruias by MGG.
- MHL approached the Court stating that they had knowledge of the dispute since 2002 and the receipt of the settlement agreement in 2015 was immaterial.
- MHL further contended that their suit filed in 2008 was within the period of limitation as they only came to know about the Settlement on 14.10.2005.
- The Division Bench of Bombay High Court held that MHL’s suit was within the limitation period as their knowledge of the Settlement was in 2005.
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Issue
- The right of MHL, if any, will be decided in the ongoing lawsuit.
- Until the lawsuit is resolved, there are no legal grounds for GGL or MHL to object to the transfer of shares to the Ruias as per the settlement of 5-12-2002.
- Without any legally established title to the shares other than MGG, the Ruias may need to explore their entitlement to have their names entered into BOCL’s registers as holders of the shares.
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Analysis
- The existence of title in MGG in the 75,001 shares cannot be disputed by GGL or MHL until the date of the consent award
- GGL and MHL’s claim for title over the shares is based on MGG’s prior title and alleged transfer after the consent award
- The Full Bench decision in Meher Singh that allowed the issue of jurisdiction under section 9A to be decided by recording evidence is overruled
- The decision in Kamalakar Shantaram is deemed to be correctly decided and not per incuriam as held in Foreshore Cooperative Housing Society Limited
- The entitlement of the Ruias to the shares in question is subject to the result of Suit IV.
- If GGL or MHL object to MGG’s transfer of shares to the Ruias, they must establish superior title to the shares.
- Preliminary issues on purely legal questions can be decided by recording evidence.
- Existence and enforceability of rights in the shares of BOCL are not decided in this order, pending Suit IV.
- Court must have jurisdiction to decide issues of limitation and res judicata.
- Decisions on jurisdiction in the context of different legal provisions are considered.
- The change in law and deletion of Section 9A make it unnecessary to consider merits of contentions.
- Jurisdiction in the Maharashtra Amendment Act can only be decided within the parameters of Section 9A interpretation.
- The Amendment Act provided for deciding preliminary issues ordered before the deletion of Section 9A.
- The decision in previous cases on Section 9A’s applicability may not have been correct.
- State of Maharashtra inserted Section 9A in the Code of Civil Procedure through an Amendment Act in 1977.
- Section 9A of CPC Maharashtra (Amendment) Ordinance 2018 required the Court to decide the preliminary issue of jurisdiction before deciding on an application for granting or setting aside interim relief in a suit.
- The Ordinance was repealed and Section 9A of the Code in its application to Maharashtra was deleted by the Ordinance.
- The Code of Civil Procedure (Maharashtra Amendment) Act, 2018 replaced the Ordinance on 29.10.2018.
- Preliminary issues framed under Section 9A were to be treated as an issue under Order XIV CPC and decided accordingly.
- The learned Single Judge and the Division Bench have made observations on the merits of the matter and the contentions of the parties.
- Certain points have been highlighted by both benches regarding the arguments presented.
- The observations made by the learned Single Judge and the Division Bench provide valuable insight into the case.
- The merits and contentions of the parties have been carefully considered by the courts in their rulings.
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Decision
- The suit filed by Nusli Wadia shall proceed afresh from the stage of framing of the issues.
- The question of limitation will be considered along with other issues in the suit.
- No issue can be decided solely based on the provision framed under Section 9A and pending consideration on the date of commencement of the Maharashtra Amendment Act, 2018.
- The decision on limitation by the Single Judge and Division Bench will be considered null and void.
- The matter will have to proceed afresh based on the Three Judges Bench judgment.
- The appeal is disposed off, setting aside the previous orders.
- The trial in Suit No IV-2410 of 2008 will proceed independently on its own merits.
Case Title: SHYAM MADAN MOHAN RUIA Vs. MESSER HOLDINGS LIMITED
Case Number: C.A. No.-009429-009429 / 2019
