SC imposes Rs25 lakh fine on cos for abuse of judicial process

MUMBAI: The Supreme Court has imposed a cost of Rs 25 Lakh each on two companies and industrialist Shyam Ruia for abuse of the judicial process by litigating for almost two decades to gain controlling interest in a Mumbai-based company.
The two companies are German based Messer Griesham GmbH and a Delhi-based Indian company Goyal Gases Ltd. Shyam Ruia is the non executive chairman at Bombay Oxygen Corporation Ltd.The genesis of the dispute was over a 1995 agreement between Goyal Gases and Griesham which allowed both to acquire any Indian company jointly.
The court battles began with Goyal Gases firing the first salvo by moving the Delhi HC against Griesham for going solo in acquiring the controlling rights of Bombay Oxygen by purchasing 75,001 shares. Anticipating Goyal’s involvement in the future, Shyam Ruia moved the Bombay high court in 1999 which passed protective orders. In 2002, however, the Ruia group and Griesham entered into a settlement. Griesham agreed to return all the 75001 shares of Bombay Oxygen, for over $100,000.
This did not bring an end to the legal battle. Messer Holding Ltd, a company incorporated in British Virgin Islands in 2000 by Griesham (MGG) and another company Morgan Trade and Commerce, a 100% owned subsidiary of Goyal Gases Ltd to whom physical shares were handed over, filed a suit in the HC claiming its controlling rights of Bombay Oxygen. The suit is still pending in the HC.
A series of legal fights continued and appeals were made to the Supreme Court. The matter in SC itself was pending since 2010, in the form of two challenges made by Goyal Gases and Messer Holdings against a Bombay high court order which held that Shyam Ruia was entitled to retain majority shares. The companies wanted the SC to put an end to the long pending bitterly fought battle, which has been a very costly affair for all the parties involved.
"We believe that it is only the parties who are to be blamed for the state of affairs. This case, in our view, is a classic example of the abuse of the judicial process by unscrupulous litigants with money power, all in the name of legal rights by resorting to half-truths, misleading representations and suppression of facts,’’ said a bench of Justices J Chelameswar and Abhay Sapre on Tuesday. “Each and every party is guilty of one or the other of the above-mentioned misconducts. It can be demonstrated, but we do not wish to waste any more time in these matters,’’ said the bench observing how the litigation has been on for “the last 18 years’’. “Considerable judicial time of this country is spent on this litigation. The conduct of none of the parties to this litigation is wholesome.’’
Senior counsel Fali Nariman and Karl Shroff for the Ruias had among many points, argued that Goyal could never claim the shares because the transfer of shares had taken place in violation of an HC injunction. Goyal’s counsel Dhruv Mehta and Paras Kuhad, from Delhi, argued that the HC order would not apply to transfer of shares.
The SC, questioned the continuance of the suits despite the one settled in 2002. “This case should also serve as proof of the abuse of the discretionary Jurisdiction of this Court under Article 136 by the rich and powerful in the name of a ‘fight for justice’ at each and every interlocutory step of a suit. Enormous amount of judicial time of this Court and two High Courts was spent on this litigation. Most of it is avoidable and could have been well spent on more deserving cases.’’
Ruia’s lawyer Shroff told TOI, “The litigation will now continue in the HC.’’