The existence of an arbitration agreement under Section 11(6) allows for disputes related to a memorandum of family settlement to be arbitrable, reinforcing the principle of kompetenz-kompetenz.

JUDGMENT (Oral)

(Video-Conferencing)

1. By this petition under Section 11 (6) of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as "the 1996 Act"), the petitioners seek reference of disputes that had arisen vis-a-vis the respondents, to arbitration, in accordance with Clause 3.15 of a Memorandum of Family Settlement (hereinafter referred to as "MFS"), dated 28th April, 2007, executed among the petitioners and the respondents, being the members of one family.

2. A reading of the MSF reveals that disputes among the petitioners and the respondents, vis-a-vis certain corporate entities being managed by them, had arisen, resulting in CP 31/2007 being filed before the Company Law Board, Principal Bench. In order to settle their disputes and differences amicably, the petitioners and respondents executed the MFS, agreeing to be bound by the terms thereof. The purpose to the MFS was specifically stated, in Clause 1(i) thereof, as being "to reduce in writing the terms and conditions of settlement of disputes and differences as agreed by and between the parties to this MFS and further terms and conditions to avoid any future controversy, disagreement, confusion and misunderstanding". The MFS also manifested the decision, of the petitioners and respondents to seek disposal of CP 31/2007, in terms thereof. It was further recited, in the MFS that the parties thereto would make a joint application, recording the terms of the MFS, for withdrawal of Co. Pet. 31/2007 and vacation of all interim orders passed in the said petition by the Company Law Board (hereinafter referred to as "CLB"). Insofar as the shareholdings of the parties to the MFS, in the companies, relating to which it was executed, were concerned, clause 2(iii), in the MFS, merits reproduction:

"iii) That notwithstanding the shareholding of the Parties and their Constituents in the Companies/businesses, properties and other assets, the parties hereto have agreed to carry out the division of the joint businesses, undertakings and properties in two parts in such a manner that one part shall be owned, controlled and managed by 'Group-I' and the other part shall be owned, controlled and managed by 'Group-II'. The businesses and properties shall be shared by two Groups in the ratio of 1:1 and the difference in values shall be settled by way of transfer of funds from one Group to the other as hereinafter determined."

3. The MFS, nevertheless, did envisage the possibility of disputes arising among the parties thereto and, in that regard, provided thus, in clauses 3.15 and 3.16:

"3.15 That in the event of any differences between the parties on the implementation and execution of the present MFS or with regard to any terms thereto, the parties agree to refer the said matter and issue to joint arbitration of Shri Ramanand Gupta and S. Devender Singh Kohli. In case of difference of opinion between the said two arbitrators, the matter shall be referred to Shri R.K. Gupta Son of Late Shri Munshi Ram Gupta, Resident of D-13, Naraina Vihar, New Delhi-110028, whose decision shall be final and binding upon the parties.

3.16 That the right to refer to arbitration any question in the event of difference or dispute amongst the parties shall be in addition to and not in derogation of the right of the parties