Back
IN THE HIGH COURT OF DELHI AT NEW DELHI
Sachin Datta, J.
Pawan Gupta & Anr. - Appellants
Versus
Kamal Gupta & Ors. - Respondents
ARB.P. No. 1010 of 2022 and I.A. No. 4456 of 2023, 18217 of 2023 and 13282 of 2023 with O.M.P.(I) (COMM.) No. 198 of 2023 and I.A. Nos. 11585 of 2023, 11867 of 2023, 14469 of 2023 & 12227 of 2023
Decided On : 22-03-2024
Arbitration - Family Settlement Dispute - Arbitration and Conciliation Act 1996 - Section 11, Section 9 - 9, 11
Fact of the Case:
The case involves a family dispute arising from an Oral Family Settlement and subsequent Family Settlement Deeds. The petitioner sought appointment of a sole arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 (A&C Act) to adjudicate disputes arising from the Family Settlement Deed. The respondent filed a petition under Section 9 of the A&C Act seeking interim measures. Intervention applications were filed objecting to the appointment of an arbitrator under the Family Settlement Deed.
Finding of the Court:
The court found that an arbitration agreement existed between the parties and appointed a sole arbitrator to adjudicate the disputes. The court dismissed the intervention applications and directed the petition under Section 9 to be treated as an application under Section 17 of the A&C Act to be decided by the arbitrator. The court kept all rights and contentions of the parties in relation to the claims/counter-claims open to be decided by the arbitrator.
Issues: The issues involved the appointment of a sole arbitrator, objections to arbitration, and the jurisdiction of the court to entertain the suit due to the presence of the arbitration clause between the parties.
Ratio Decidendi: The court held that the scope of jurisdiction of a referral court is confined to the examination of the formal existence of an arbitration agreement. The court also emphasized the duty to uphold family arrangements and give full effect to such arrangements instead of disturbing them on technical or trivial grounds. The court clarified that objections under Section 8 of the A&C Act had already been raised in a related suit, amounting to sufficient compliance with the Act.
Final Decision: The court appointed an independent sole arbitrator to adjudicate the disputes between the parties, directed the petition under Section 9 to be treated as an application under Section 17 of the A&C Act, and kept all rights and contentions of the parties open to be decided by the arbitrator.
JUDGMENT
Sachin Datta, J. - ARB.P. 1010/2022, is a petition under Section 11 of the Arbitration and Conciliation Act, 1996 ('A&C Act') seeking appointment of a sole arbitrator to adjudicate disputes between the parties arising out of an Oral Family Settlement dated 30.09.2014 as recorded in the Family Settlement Deed dated 20.06.2015 and followed by the Family Settlement Deed dated 09.07.2019 ('FSD').
2. O.M.P.(I) (COMM.) 198/2023, is a petition under Section 9 of the A&C Act seeking certain interim measures.
3. In both the Sections 11 and 9 petitions, intervention applications[IA Nos. 18217/2023 & 13282/2023 in ARB.P. 1010/2022 and IA No. 12227/2023 in O.M.P.(I) (COMM.) 198/2023], have been filed by one Mr. Rahul Gupta and certain companies through its authorized representative Mr. Rahul Gupta, objecting to the appointment of arbitrator under the FSD.
Factual Background
4. Briefly put, the facts are that Mr. Pawan Gupta (petitioner no.1) is stated to be the founding member of the family business of P.P. Jewellers Group, who started the said business in 1980s. It was subsequently joined by other family members including his elder brother Kamal Gupta (respondent no.1) and his family members. Over the years, the family members have incorporated various entities for operating this business. In the year 2014, on account of certain disputes arising between the family members, it was decided to partition the assets/ businesses etc. between the family members. Consequently, an Oral Family Settlement was arrived on 30.09.2014; this was recorded in the Family Settlement Deed dated 20.06.2015. Mr. Rahul Gupta (intervenor), who is the son of Mr. Kamal Gupta, is mentioned as one of the executant of the said settlement deed although it is disputed if he is a signatory to the said settlement. In continuation of the same, the family members have executed a Family Settlement Deed dated 09.07.2019. Notably, Mr. Rahul Gupta was not a signatory to the said FSD. This was noted in the FSD itself. Annexure 'A' of the FSD itself identifies and separates the assets and businesses of Mr. Rahul Gupta, in which he has full/partial control, from the performance of the FSD. Annexure 'B' of the FSD records certain identified assets that were not dealt in the FSD. Annexure 'C' of the FSD records the prior division of assets between the parties. Annexure 'C-1' records the additional asset allocated to 'Pawan Gupta Group' towards its share. Annexure 'D' identifies the liabilities of the parties. Annexure 'E' rearranged the properties of the Kamal Gupta Group amongst its own constituents which included Mr. Rahul Gupta.
5. Mr. Pawan Gupta and her wife Mrs. Renu Gupta (i.e. the petitioners) described as "Pawan Gupta Group" in the FSD are aggrieved since the "Kamal Gupta Group", as described in the FSD, has not performed its obligation arising from the FSD. In particular, Pawan Gupta Group is aggrieved since the immoveable property bearing no. 2700, Desh Bandhu Gupta Road, Karol Bagh, New Delhi i.e., the Karol Bagh showroom of P.P. Jewellers, falling to its shares as per the FSD, has not been transferred to it. It is also aggrieved on account of Kamal Gupta Group not providing Pawan Gupta Group its share in the stocks of the family business.
6. Disputes having arisen between the parties, Pawan Gupta filed a petition under Section 9 of the A&C Act, inter alia seeking urgent protective orders with reference to implementation of the FSD. Vide judgment/order dated 05.07.2022 in O.M.P (I) (COMM) No.186/2022, the said petition was partly allowed and Kamal Gupta Group was restrained from alienating or creating third party rights in respect of the immovable properties including property bearing no. 2700 Desh Bandhu Gupta Road, Karol Bagh, New Delhi falling to Pawan Gupta's share till the time the matter is considered by the Arbitral Tribunal.
7. Thereafter, the petitioners sent a notice invoking arbitration dated 08.07.2022 upon the Kamal Gupta Group. The said notice was duly re
The court emphasized the duty to uphold family arrangements and give full effect to such arrangements instead of disturbing them on technical or trivial grounds.
The main legal point established in the judgment is the duty of the courts to uphold family arrangements and give full effect to such arrangements to maintain peace and harmony within the family, as ....
The court ruled that a non-signatory to Family Settlement Deeds cannot be bound by their terms, ensuring that their rights remain protected outside arbitration proceedings.
Only parties explicitly named in the arbitration agreement can be compelled to arbitration; failure to properly notify other potentially affected parties nullifies their obligation under the agreemen....
1. A proper invocation of the arbitration clause is mandatory for the appointment of an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. 2. A party to an arbitration agreeme....
No arbitration clause relating to dispute between the parties in not appointing appellant as stockist and claim of compensation towards loss of goodwill and reputation. High Court erred in proceeding....
Court has limited jurisdiction under Section 11 of Arbitration and Conciliation Act, 1996.
Important Point – Subject matter of suit and subject matter of arbitration are distinct.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
