KYATI REALTORS PVT LTD Vs. JYOTI LTD

JUDGEMENT

(1.) The petitioners by way of present petition, filed under Articles 226 and 227 of the Constitution of India, have prayed for the following reliefs:

(2.) The short facts necessary to decide the present petition are that the petitioners, claiming the shareholdings of 12 lakhs shares of the respondent no.1 company, which is a public listed company, have filed the present petition alleging inter alia, that when they purchased the shares on 06.05.2014 off market from the respondent no.3, they were not aware about any agreement executed or any disputes pending between respondent nos.1 to 3. They came to know about the disputes between the respondent nos.1 to 3, when they were made aware about the proceedings of company petition pending before the NCLT and of the Special Civil Application No.14572 of 2017 filed against the respondent company. It is the further case of the petitioners that pending the said disputes, the respondent no.3 had sold out their holdings of 12 lakhs shares in the respondent no.1 Company to the petitioners off market on 06.05.2014 and therefore, the petitioners were bonafide purchasers of the said shares for value without notice. According to the petitioners, the respondent nos.1 and 2 had filed an arbitration petition being No.551 of 2014 before this Court against the respondent no.3 seeking appointment of an Arbitrator under section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the said Act'). However, the said petition was permitted to be withdrawn by the Court on 19.12.2014 with a liberty to file fresh petition. Thereafter, another petition being Arbitration Petition being No.17/2015 was filed by the respondent nos.1 and 2 against the respondent no.3. The said petition was allowed by the Court vide the order dated 28.08.2015, wherein respondent no.4 came to be appointed as the sole Arbitrator. The respondent no.1 and 2 filed their statements of claims in the said arbitral proceedings, also claiming reliefs in respect of the shares purchased by the petitioners from the respondent no.3 and thereby affecting petitioners' rights, however, the petitioners were not made parties to the said arbitral proceedings. Though respondent no.3 in its written statement in the arbitral proceedings had mentioned about the third party rights having been created, the respondent nos.1 and 2 had contended before the Arbitral Tribunal that the presence of third party was not necessary for adjudication of the claims in the arbitral proceedings. According to the petitioners, the respondent no.4- Arbitrator also dismissed the application of the respondent no.3 to decide the issue nos.6 and 7 as the preliminary issues, which pertained to the third party rights. Hence, the present petition is filed.

(3.) It may be mentioned at this stage that though the Court had not issued notices to the respondents, learned Advocate Mr.Jenil Shah had filed his appearance for the respondent nos.1 and 2 before the Co-ordinate Bench, and the said respondents were permitted to file their reply. Accordingly, the affidavit-in-reply has been filed on behalf of respondent no.1-Company raising the preliminary objection against the maintainability of the petition under Article 226 of the Constitution of India. It has been contended that the petitioner nos.2 and 3 have already transferred their entire shareholdings during 13.04.2018 to 24.07.2018 and therefore, petition at the instance of the said petitioners, was not maintainable. It has been further contended that the writ of prohibition could not be issued against the arbitral tribunal constituted at the instance of the parties. The order of the High Court appointing Arbitral Tribunal in the arbitration petition filed by the respondent nos.1 and 2 had become final. The disclosure made by the respondent no.3 to the Stock Exchange Board in terms of Regulation 29(2) of the Disclosure Regulations framed under SEBI Act, also acknowledged that the subject transactions were off market transactions and the petitioners had deemed knowledge about obligation attached to the subject shares as stipulated in share holders agreement dated 28.08.2010. Thus, the petitioners could not claim to be bonafide purchasers of the subject shares for value without notice. It is also contended that the proceedings before the Arbitral Tribunal have reached to the final stage.