IMPORTANT POINT
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.

JUDGMENT :

C. HARI SHANKAR , J.

1. During the course of hearing, and from the available records in this case, much has emerged which troubles me considerably; yet, I have attempted to confine myself within the peripheries of the applications under discussion, keeping in mind the fact that an order under Section 11(5) of the Arbitration and Conciliation Act, 1996[“the 1996 Act” hereinafter] already stands passed by a coordinate Bench of this Court on 22 March 2024, though one of the applications which this judgment prays that the said decision be recalled. Needless to say, I cannot do so

A Bird’s Eye View

2. The primary dramatis personae in this case are three; Pawan Gupta, Kamal Gupta and Rahul Gupta. Pawan Gupta and Kamal Gupta are brothers, and Rahul Gupta is the son of Kamal Gupta.

3. Pawan Gupta, Kamal Gupta and Rahul Gupta were represented, in these proceedings, by Mr. Sandeep Sethi, learned Senior Counsel, and Mr. Gautam Narayan and Mr Amit Sibal, learned Senior Counsel and Mr. J Sai Deepak, learned Counsel respectively.

4. Additionally, Ms Malavika Trivedi, learned Senior Counsel appeared for Renu Gupta, the wife of Pawan Gupta, and advances the same stand as Pawan Gupta.

5. The genesis of the dispute, in this case, lies in two Family Settlement Deeds[“FSDs” hereinafter] dated 20 June 2015 and 9 July 2019. Rahul Gupta is not a signatory to either, though he is named as the “third party” in the FSD dated 20 June 2015[“the 1st FSD” hereinafter]. In the FSD dated 9 July 2019[“the 2nd FSD” hereinafter], he has not been made a party at all. Legally speaking, therefore, Rahul Gupta is a stranger to both the FSDs.

6. Pawan Gupta and Renu Gupta together filed Arb P 1010/2022 under Section 11 (5) of the 1996 Act, for reference of certain disputes, stated to have arisen between them, to arbitration.

7. Respondents 1 to 6, which included Kamal Gupta as Respondent 1, filed a reply, contending, that the disputes which Pawan Gupta sought referred to arbitration were not arbitrable at all, inter alia, as the FSDs involved substantial holdings of Rahul Gupta, who was not a party to the FSDs.

8. In the said Arb P 1010/2022, IA 13282/2023 was filed by Rahul Gupta and IA 18217/2023 was filed by L.R. Builder Pvt Ltd[“LR Builders” hereinafter], Purnima Associates Pvt Ltd, Purnima Buildmart Pvt Ltd, M.G. Buildmart Pvt Ltd, P.G. Colonisers Pvt Ltd, P.V. Buildmart Pvt Ltd, Glow Jewellery Pvt Ltd, P. Sen Engineering Pvt Ltd and P. Sen Technical Services Pvt Ltd[“the intervenor companies” collectively hereinafter], seeking permission to intervene in the Arbitration Petition. These applications contested the arbitrability of the dispute on the ground that the FSDs purported to deal with properties owned by Rahul and the intervenor companies, behind their back.

9. After IA 13282/2023 was filed by Rahul Gupta, Kamal Gupta, who had, in his reply to the Arbitration Petition, contested the arbitrability of the dispute, effectively abandoned his objection and joined hands with Pawan Gupta in seeking that the Arbitration Petition be allowed and an arbitrator appointed, as is recorded in order dated 1 August 2023 passed by the learned Single Judge.

10. Arb P 1010/2022 finally came to be allowed by a coordinate Bench of Sachin Datta J, vide judgment dated 22 March 2024[2024 SCC OnLine Del 2163]. A learned former Judge of the Supreme Court was appointed as the Arbitrator to adjudicate on the disputes between Pawan Gupta and Kamal Gupta and other parties to the Arbitration Petition whom they were representing.

11. IA 13282/2023 and IA 18217/2023 were dismissed by the learned Single Judge, inter alia recording the statement of learned Counsel appearing for Pawan Gupta and Kamal Gupta that “none of the properties owned by the intervenor companies, though mentioned in annexures of the FSD, will be dealt/divided by the said parties in the arbitration”. Though the expression used here is “intervenor companies”, a holistic reading of paras 17 and 18 of the judgment of Sachin