2015 Supreme(SC) 1082

SUPREME COURT OF INDIA
VIKRAMAJIT SEN, SHIVA KIRTI SINGH, JJ.
Rajni Sanghi – Appellant
Versus
Western Indian State Motors Ltd. & Ors. – Respondents
CIVIL APPEAL NO. 3687 OF 2006 WITH C.A. Nos. 503 of 2001 and 2763 of 2002
Decided On : 01-12-2015

IMPORTANT POINTS
‘Otherwise invalid’ in Section 30(c) of Arbitration Act, 1940 is not controlled by the principle of ejusdem generis.
Acts of approbation and reprobation are not permissible.

Headnote:(a) Administration of Justice – Judicial propriety – Court refusing to stay an action or defendant abstaining from asking it to do so – Court has seisin of the dispute – Rights of the parties are settled by its decision and by its decision alone. (Para 14)

       AIR 1921 Calcutta 770; AIR 1914 Allahabad 275 – Cited with approval

       (b) Arbitration Act, 1940 – Section 30(c) – Otherwise invalid – Not controlled by the principle of ejusdem generis – Quite wide in amplitude and available to the court if in its view the award requires to be treated as invalid – Courts at Bombay and Rajasthan having jurisdiction deciding the properties and recording a family arrangement in respect of other matters – These judgments and orders cannot be ignored or obliterated merely because the award was still waiting to be made a rule of the court – Delhi High Court rightly set aside the award on the ground that it is otherwise invalid on the date of consideration. (Para 22, 25)

       (1976) 4 SCC 32; (1989) 2 SCC 458 – Relied upon

       (c) Family arrangement – Family arrangements are of distinct nature and have specific purpose – Need to be protected – Settlement/agreement amicably settling disputes, even post-award, will prevail over the award which is not yet made rule of the court – Instantly, family arrangements made before the Rajasthan High Court in 1994 before the Company Judge and in 1995 before the Division Bench were required to be protected and given pre-eminence over the award which was waiting to be made the rule of the court. (Para 26)

       (d) Approbate and reprobate – Impermissibility – A.K.Sanghi giving undertaking to withdraw his petition for making the award a rule of the court – Not honouring and going back on it – Secondly, A.K.sanghi signing the settlement on behalf of his group but his son Vijay Sanghi trying to obstruct the scheme of reconstruction-cum-family settlement of 1994 by getting transposed as an appellant in Company Appeal – Junior members of family are bound by decisions of a Karta in matters of family business and property – Such acts of approbate and reprobate – Impermissible (Para 27)

       (1998) 6 SCC 507 – Relied upon

       (1990) 1 SCC 259; AIR 1939 PC 80 – Referred

       (e) Family arrangement – Original arrangement of 1994 and supplementary arrangement of 1995 – High Court remanding the matters to Company Judge – Not on ground of any defect in the agreements or supplementary agreements but on account of certain technical requirements ought to have been ignored – Challenge to remand set aside – Arrangements affirmed. (Para 28)

       AIR 1962 SC 903; (1976) 3 SCC 119 – Relied upon

       AIR 1986 SC 1218; (2004) 7 SCC 1; (1987) 4 SCC 398 – Referred

       Facts of the case:

       The four sons of late Motilal Sanghi effected a de facto partition of the then existing three family business. The eldest son (Late) N.K. Sanghi became in charge of family business in Rajasthan. The next brother (Late) A.K. Sanghi got charge of business at Delhi and the remaining two, R.K. Sanghi and M.K. Sanghi got charge of business at Bombay. In 1964 Sanghi Motors Private Limited (Bombay) expanded to establish a factory for manufacture of oxygen in the name of Sanghi Oxygen.

       R.K. Sanghi looked after the oxygen division and the youngest brother M.K. Sanghi looked after the motor division of the Sanghi Motors Private Limited (Bombay).

       With passage of almost two decades and changing profile of family headed by the four brothers there was apparently some friction first at Bombay which led to an arrangement signed by the four brothers on 6.7.1983. This was mainly for resolving dispute of authority between the two brothers in respect of business at Bombay. Soon thereafter attempt was made for a larger family agreement for partition of all the family business consisting of four partnership firms and four companies. This family agreement involving the methodology of partition chalked out on 22.2.1984 in a board meeting of M/s Sanghi Motors Private Limited (Bombay) held at Jodhpur ran into rough weather and could not be implemented because of differences.

       Thereafter all the four groups entered into an arbitration agreement on 6.8.1984 and appointed one Sh. H.K. Sanghi, a family friend as the sole arbitrator for effecting a partition of the family business under the control of four groups into four equal lots but with an understanding that the division would maintain the place of business of each group as it existed already.

       The award dated 3.12.1987 was filed with High Court of Delhi. Objection to the award was filed by M.K. Sanghi within time and beyond time by R.K. Sanghi and also by Sanghi Motors Private Limited (Bombay). On the other hand A.K. Sanghi (now represented by his sons Vijay Sanghi and Ajay Sanghi, appellants in C.A. No. 2763 of 2002) filed Suit in the High Court of Delhi to make the award a rule of the Court. Learned Single Judge of the Delhi High Court took notice of subsequent developments in the company case at Bombay High Court and in another Company petition no. 6 of 1986 filed by R.K. Sanghi in the High Court of Rajasthan and set aside the award by order dated 11.12.1996. This order was upheld in appeal by the Division Bench vide impugned order.

       Finding of the Court:

       Amicable family settlement/arrangement, even post award, shall prevail.

       Result: Civil Appeal No.3687 of 2006 allowed and Civil Appeal Nos.2763 of 2002 and 503 of 2001 dismissed.