Back
2013 Supreme(Bom) 1096
High Court of Judicature at Bombay
ANOOP V. MOHTA, JJ.
Chandrakant Phoolchand Sanghvi & Others
Versus
Anilkumar Phoolchand Sanghvi & Others
Arbitration Application No. 34 of 2012 With Arbitration Application LODG. No. 493 of 2013
Decided on : 20-06-2013
For the Applicants:Virag Tulzapurkar, Sr. Advocate with Zal Andhyarujina, Rohan Savant, M. Joshi i/b M/s Crawford Bayley & Co., Advocates.
For the Respondents:R1 to R3, F. Devitre, Sr. Advocate with S. Rustomjee, Rohan Cama i/b Dastur Dadhich & Kapadia, Advocates.
The court has the jurisdiction to pass interim orders under Section 11 of the Arbitration Act, including orders to protect the subject matter of the arbitration and to maintain the status quo.
Headnote:
ARBITRATION - Section 11 - Appointment of Arbitrator - Family Settlement Agreement - Mediation - Withdrawal of petition - Interim orders - Continuance - Power of Court - Jurisdiction - Arbitration Act, 1996, Sections 8, 9, 11, 148, 151 - Civil Procedure Code, 1908, Order 10 Rule 1A to 1C, Section 89.
Fact of the Case:
The parties, members of two groups of the same family, were involved in a dispute. They entered into a Family Settlement Agreement and appointed an arbitrator to resolve their disputes. However, the arbitration proceedings could not be completed. Subsequently, one group filed an application under Section 11 of the Arbitration Act, 1996 (Arbitration Act) for the appointment of a sole arbitrator. The other group opposed the application and filed a separate application under Section 11 of the Arbitration Act for the appointment of a different arbitrator. During the pendency of the arbitration applications, the parties agreed to mediation. The mediation proceedings were unsuccessful, and the mediator submitted a final report. One group then sought to withdraw its arbitration application, while the other group sought the appointment of an arbitrator.
Finding of the Court:
The court held that there was an arbitration agreement and an arbitrable dispute between the parties. It also held that the court had the jurisdiction to pass interim orders under Section 11 of the Arbitration Act, including orders to protect the subject matter of the arbitration and to maintain the status quo. The court further held that the parties could not withdraw their arbitration applications without the consent of the other party and that the interim orders would continue for a further period of 8 weeks to allow the other group to initiate appropriate proceedings.
Issues: 1. Whether there was an arbitration agreement and an arbitrable dispute between the parties? 2. Whether the court had the jurisdiction to pass interim orders under Section 11 of the Arbitration Act? 3. Whether the parties could withdraw their arbitration applications without the consent of the other party? 4. Whether the interim orders should be continued?
Ratio Decidendi: 1. The court held that there was an arbitration agreement and an arbitrable dispute between the parties based on the Family Settlement Agreement and the arbitration clause contained therein. 2. The court held that it had the jurisdiction to pass interim orders under Section 11 of the Arbitration Act, including orders to protect the subject matter of the arbitration and to maintain the status quo. The court relied on the Supreme Court's decision in SBP & Co v. Patel Engineering Ltd. & Anr., which held that the power exercised by the Chief Justice of India, and/or Chief Justice of High Courts, and/or designated Judge and/or Institution is “judicial power and not administrative power”. 3. The court held that the parties could not withdraw their arbitration applications without the consent of the other party. The court relied on the Supreme Court's decision in Afcons Infrastructure Limited & Anr. v. Cherian Varkey Construction Company Private Limitied & Anr., which held that “A civil Court exercising power under Section 89 of the Code cannot refer a suit to arbitration unless all the parties to the suit agree for such reference.” 4. The court held that the interim orders should be continued for a further period of 8 weeks to allow the other group to initiate appropriate proceedings.
Final Decision: The court allowed the application filed by one group under Section 11 of the Arbitration Act and appointed a sole arbitrator to resolve the dispute. The court also permitted the other group to withdraw its arbitration application on the condition that the interim orders would continue for a further period of 8 weeks. Both arbitration applications were disposed of accordingly.
The matters are listed for final hearing by consent of the parties. Heard accordingly. The rival contentions so raised are revolved around the common facts and circumstances, between the parties and therefore, this common judgment.
2. There are two groups of the same family involved in the matter. The Petitioner Nos.1 to 5 (in Arbitration Application No.34 of 2012) be referred to as “CPS group”, and the Respondents therein (i.e. Respondent Nos.1 to 3) be referred as “APS group”. The APS group has filed Arbitration Application(Lodg.) No.493 of 2013 and prayed for an appointment of Sole Arbitrator to resolve the dispute in accordance with Deed of Family settlement and agreement dated 24.4.2006. The APS group, apart from joining CPS group, has also added three companies as parties-respondent nos.6 to 8. Both the parties have invoked Section 11 of Arbitration And Conciliation Act, 1996 (for short 'Arbitration Act').
Events:-
3. The basic events are quoted as under:
(a) “Between 2010-2012, 22 proceedings were filed and pending between the parties, including the Arbitration Application No.34 of 2012. On 07.09.2012, an order was passed referring the parties in Arbitration Application No.34 of 2012 to mediation and appointing Mr. Sriram Panchu, Senior Advocate, as the Mediator. It was recorded in the order that:
“Parties are agreed that all their disputes and differences may be made the subject matter of the mediation proceedings without prejudice to their rights and contentions and that the criminal proceedings shall be held in abeyance in the meantime to facilitate a settlement being exposed.”
(b) On an Application for speaking to the minutes of the order dated 7 September 2012 made by the petitioners before Dr. Justice D.Y. Chandrachud, an order was passed adding the words “and other” after the word criminal in para-2 of the order dated 7 September 2012.
(c) On 25 & 26 October 2012, the first session of mediation before the learned Mediator Mr. Sriram Panchu, Senior Advocate was held in Mumbai and was attended by Respondent Nos.1 and 2 and Petitioner No.1 with their Attorneys.
(d) On 04.12.2012, Appeal from Order No.275 of 2012 filed by the Respondents was listed before Justice Mr. S.C. Dharmadhikari, and following order was passed:
“as a last chance list this Appeal from Order under the same caption on 14th January 2013. No further adjournments will be granted.”
(e) On 22 and 23 October 2012, the second session of mediation before the learned Mediator was held in Mumbai. The next session for mediation was fixed on 25th and 26th January 2013.
(f) On 4 January 2013, Arbitration Application was listed before Justice Dr. D.Y. Chandrachud, when the following order was passed:
“the Court has been apprised of the fact that Mediation proceedings are in progress. Hence, on the joint request of Counsel, the further hearing shall stand over to 15 March 2013.
On 10 January 2013, the learned Mediator filed his Interim Report in the above matter, inter alia recording that:
“The first mediation session with the parties was conducted on 25.10.2012 and 26.10.2012 in Mumbai. The second mediation session was held on 22.12.12 and 23.12.12 in Mumbai. The next session has been fixed for 25.01.13 and 26.01.13. The mediation has made substantial progress. The parties are trying to narrow down their differences and arrive at a settlement which effectively resolves the dispute between them. The parties are in the process of preparing a draft settlement agreement for consideration during the next mediation session.
On 14 January 2013, Appeal from Order No.275 of 2012 was listed before Mr. Justice S.C. Dharmadhikari. The Respondent herein produced the Interim Report dated 10 January 2013 of the learned Mediator before the said Court. The order dated 4 January 2013 passed in the Arbitration Application No.34 of 2012 was also tendered. The learned Judge has passed the order directing that:-
“If the Mediator does not finalize the proposal plac
