Souren Chander Alimchandani vs 3 Abhin Chander Alimchandani
2010 Latest Caselaw 298 Bom

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                IN THE  HIGH COURT OF JUDICATURE AT BOMBAY

                   ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                                
                      ARBITRATION PETITION NO. 987 OF 2009 




                                                        
    Souren Chander Alimchandani,
    Adult, Indian Inhabitant, residing at
    33, 3rd Floor, Advent, 




                                                       
    General J. Bhosale Marg, 
    Mumbai-400 021.                                              ....Petitioner.

          Vs.




                                           
    1
                            
          Chander Rupchand Alimchandani
          Adult, Indian Inhabitant, residing
                           
          of 30, Gulmarg, Napean Sea Road,
          Mumbai-400 006.

    2     Nirmala Chander Alimchandani,
            

          Adult, Indian Inhabitant, residing
          of 30, gulmarg, Napean Sea Road,
         



          Mumbai-400 006.

    3     Abhin Chander Alimchandani,
          Adult, Indian Inhabitant, residing





          of 26 Gulmarg, Napean Sea Road,
          Mumbai-400 006.                                        ....Respondents.


    Mr. Pravin Samdhani, Sr. Advocate with Mr. Kunal Mehta i/by M/s. 





    Wadia Ghandy for the Petitioner.

    Mr. Haresh Jagtiani, Sr. Advocate with Mr. Siddhesh S. Bhole, Mr. Anil 
    D'Souza   and   Ms.   Nisha   Srinivasan   i/by   Mr.   Yashpal   M.   Jain   for 
    Respondent Nos. 1 and 2.

    Mr. J.P. Sen, i/by Mr. Ravi Rattesar for Respondent No. 3. 




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                                 CORAM :  ANOOP V. MOHTA, J.

                                    DATE    :  16th  December, 2010




                                                                                      
    ORAL JUDGMENT:-




                                                             

The Petitioner has invoked Section 9 of the Arbitration and

Conciliation Act, 1996 (for short, the Act). It was filed on 18th

November, 2009 for interim reliefs; (a) appointment of Receiver of the

original share certificates and (b) dealing with the same in any

manner till the final award and pending the Arbitration Proceedings

and also prayed for injunction in terms of prayer clause (c) from

exercising voting rights in respect of the trust shares constituting

11.47% of the shareholding of the company at the AGM of the

company which was fixed on 24th November, 2009.

2 After hearing both the parties, on 24th November, 2009, while

admitting the Petition, this court not granted prayer clause (c) by

observing as under:

"5 Admittedly, there is a clause/provision in the trust deed itself, which provides an authorizes the trustees, in a given case, to extend the said period also. There is a resolution of a minutes of meeting of the board of trustees of the trust held on 12th January, 2007 by which the trustees have decided to extent the said period unanimously, to retain peace and harmony, for further period of 10 years i.e till 24th March, 2017. The same is

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supported by an affidavit filed by; Respondent No.2 dated 24/11/2009. The learned counsel appearing for the Petitioner, however, disputing the same. The learned

counsel appearing for the Petitioner proceeded with the matter on the basis of denial to the affidavit filed in reply

by the respondents. At present, unless it is adjudicated finally, I am inclined to accept this resolution against the Petitioner, whereby the trustees who are the parents of the beneficiaries and in the interest of family peace and

harmony, have decided to extend the maturity period. The Petitioner at this stage, is not entitled to any relief by overlooking this basic documents."

3 The matter is now listed for final hearing. There are no basic

changes in circumstances, except the fact that, now the AGM is fixed

on 21st December, 2010.

4 The Petitioner and Respondent No.3 are brothers the

beneficiaries of a "Alimchandani Family Trust" (the trust) in question.

On 24th March, 1982, an Indenture (the trust deed) was made

between one Mrs. Indira Bihari Ahuja (the Settler) and Mrs. Nirmala

Chander Alimchandani and Mr. Chander Rupchand Alimchandani i.e.

Respondent Nos. 1 and 2 respectively (the parents). The Petitioner

has 50% share and so also Respondent No.3, as they were minors,

subject to expiry of 25 years, as recorded. Therefore, from 25th

March, 2007, as per clause 3 of the Trust Deed, the Petitioner and

Respondent No.3 are entitled to be possessed of all Trust funds

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constituting a corpus of the said Trust. The Petitioner is also entitled

to a transfer in his favour of his shares of the Corpus 2448 fully paid-

up equity shares, constituting approximately 5.74% of the

shareholding of the company on and from 25th March, 2007. In spite

of the repeated requests, Respondent Nos. 1, 2 and 3 failed to give

effect to the Trust. Therefore, the disputes.

5 Clause 20, which is the basic clause of Arbitration, is reproduced

as under.

"20. Subject to contents of clause 9 of this Trust Deed,

every dispute or differences regarding the interpretation of any of the clauses or provisions or the contents of this

Trust Deed or between the Trustees, or the Trustees and Beneficiaries or the beneficiary inter-se regarding the rights, titles or interest flowing or arising from this Trust Deed or consequential thereto, shall be referred to

arbitration of sole arbitration of Shri of any on whom he nominates and such nomination is intimated to the Trustees in writing, and in the absence of or refusal of Shri to act as sole arbitration for any reason whatsoever to one or

more arbitrators as may be appointed by the trustees and such disputes as differences shall be resolved in pursuance of the provisions of Indian Arbitration Act, 1940 or any other statute in force in its place and the decision of Arbitrator or Arbitrators, as the case may be shall be final and binding on the parties to such arbitration."

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    6      Admittedly,   the   Petitioner   and   Respondent   No.3   were 

    minors/beneficiaries   as   referred   above.     The   Deed/   Indenture 




                                                                                     

admittedly signed by the Settler and the Trustees and not by the

beneficiaries.

7 The petition under Section 9, though filed in the year 2009

based upon this alleged arbitration clause, yet there was no specific

objection raised, at any point of time, about the maintainability of the

Petition for want of Specific Arbitration clause between the parties as

contemplated under Section 7 read with Section 9 of the Act. No such

issue was raised when interim relief was refused on 24th November,

2010. In the meantime, as Respondent Nos. 1, 2 and 3 failed to

appoint any Arbitrator, an Application under Section 11 of the Act

was filed. All the respondents being parties filed a reply to the

Application. Admittedly, the basis for appointment of the Arbitrator,

as averred in the Petition revolve around clause 20 of the Trust Deed.

By an order dated 21st October, 2010, an Arbitrator has been

appointed and the Application was accordingly disposed of.

8 The learned counsel appearing for Respondent Nos. 1, 2 and 3

has raised a preliminary objection at the final hearing stage, that as

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the Petitioner is not signatories to the Trust Deed and therefor cannot

invoke Section 9 for any interim reliefs. Respondent No.3 was also

not signatories to the said Trust deed. It is only signed by Respondent

Nos. 1 and 2, and the settler and are only the parties to the Trust

Deed. Therefore, on the sole ground, the present Petition need to be

dismissed and there is no question of granting any interim relief in

terms of prayer clauses (a), (b) and even (c).

The reliance is placed upon the following citations:-

1 SBP & Co. Vs. Patel Engineering Ltd. & Anr (2005) 8 S.C.C. 618;

          2    Vijay   Kumar   Sharma   @   Manju   Vs.  
               Raghunandan Sharma @ Baburam & Ors., 2010  
         



               (3) Mh.L.J. 1 (SC)

          3    Ms. Chhaya Shriram Vs. Deepak C. Shriram & Ors.  
               150(2008) DLT 673 (NULL).





    9     In answer to this, the learned senior counsel appearing for the 

Petitioner has relied on the submission that in view of clause 20 as

reproduced above, there is a privity of contract and that clause itself

provides for settlement of dispute arising out of dispute between the

trustees as well as the beneficiaries. Therefore, this Trust Deed itself

is sufficient to consider though the Petitioner and Respondent No.3

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are not signatories, to the said Trust Deed, as contemplated under

Section 2(7) and 9 of the Act. The Petition is maintainable as an

arbitrator has been already appointed by the Court.

10 There is no dispute considering the scope of Section 9 of the Act

that it is necessary for the Court to decide before granting any relief to

consider that there exists a Arbitration Agreement between the parties

and there also exists Arbitrable issues arising out of the same.

Therefore, no further discussion is necessary, so far as SBP &

Company (supra) is concerned.

11 In Vijay Kumar Sharma (supra) the case was of an alleged Will

which nowhere provided for any Arbitration clause. There was a

dispute even with regard to the existence of the Will. The validity of

Will itself was pending. The finding was that there was no Arbitration

agreement between the parties and therefore under Section 11 of the

Act, no question of appointment of an Arbitrator. The facts are totally

distinct and distinguishable.

12 Ms. Chhaya Shriram (Supra) this is a case under Section 11

of the Act in connection with the Trust deed. In that case also, the

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Applicant and the Respondents were neither settler nor trustees of the

Trust. They were only the beneficiaries of the Trust. The issue was

whether such beneficiaries are also entitled to invoke Arbitration

clause provided in the Trust Deed to settle the so called disputes.

After considering the scope and purpose of the Act, as well as, the

Trust Deed and the rights of beneficiaries who were admittedly not

signatories to the same, it is held that the dispute between the

Applicant and the Respondent could not have been resolved by the

Arbitrator as they were not bound by the Arbitration clause.

Therefore not appointed the Arbitrator under Section 11 Petition.

13 The present case is quite similar, but additional factor here is

that admittedly this Court in Application under Section 11 of the

Arbitration Act, though contested by filing affidavit, but ultimately the

Arbitrator has been appointed. This factor is also relevant to consider

the scope and purpose of Section 9 in a case where for whatever may

be the reason, the Arbitrator has already been appointed.

14 Section 9 itself contemplates, if a case is made out to grant an

interim protection/ relief, pending the final adjudication and/or

passing of award by the Arbitrator. Therefore, whether there exists

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valid agreement between the parties, in my view, in the present facts

and circumstances of the case cannot be re-adjudicated in the petition

under Section 9 of the Act, as submitted by the senior counsel

appearing for the respondents.

15 The situation and the field under Sections 9 & 11, as rightly

submitted by the learned senior counsel appearing for Respondent

Nos. 1 and 2, are different, but the fact that the parties have already

invoked Section 11, pending Section 9 Petition and the Arbitrator has

already been appointed and as the parties are not prevented and/or

debarred from raising objection to the existence and/or validity of the

Arbitration agreement under Section 16 of the Act, there is no reason

to decide that issue in Section 9 Petition. There will be a clear

conflict of the power and jurisdiction if any decision is taken in

Section 9 Petition, now at this stage, when admittedly the parties are

at liberty in view of Section 16 to raise the same before the Arbitral

Tribunal.

16 We have in Sandip Industries & anr. vs. Superpack & anr., 2009

(Supp.) Bom. C.R. 285, while dealing with Sections 11 and 16 of the

Act read with SBP & Co. vs. Patel Engineering Limited & anr., 2006(1)

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Bom.C.R. 585, observed as under:

"4 A Constitutional Bench of the Apex Court in

(SBP & Co. vs. Patel Engineering Limited & another), reported in 2006(1) Bom.C.R. 585 (S.C.) (C.B.) : 2005

DGLS (soft) 530 : A.I.R. 2006 S.C. 450 : 2005 (8) S.C.C. 618, while dealing with section 11(6) & (7) and section 16 of the Arbitration Act has observed as under:-

"19 Section 16 is said to be the recognition of the principle of Kompetenz-Komopetenz. The fact that the Arbitral Tribunal has the competence to rule on its own jurisdiction and to define the contours of

its jurisdiction, only means that when such issues arise before it, the Tribunal can and possibly, ought to

decide them. This can happen when the parties have gone to the Arbitral Tribunal without recourse to

section 8 or 11 of the Act. But where the jurisdictional issues are decided under these sections, before a reference is made, section 16 cannot be held to empower the Arbitral Tribunal to ignore the

decision given by the Judicial Authority or the Chief Justice before the reference to it was made. The

competence to decide does not enable the Arbitral Tribunal to get over the finality conferred on an order passed prior to its entering upon the reference by the very statute that creates it ...."

                     9       Therefore,   taking   overall   view   of   the 
               scheme   of   section   16,     one   thing   is   very   clear   that 

Arbitrator has power to decide the applications with regard to the existence of Arbitration agreement and

objection in respect of jurisdiction."

17 I have already observed in Perma Container (UK) Line Ltd. vs.

Perma Container Line (India) Pvt.Ltd. & ors., 2010(2) Bom.C.R.

419 while dealing with Sections 9, 11 and 16 of the Act, as under:

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"20 The scope and purpose of Sections 8, 9, 11, 16 and 45 of the Act, are totally different in all respect. The Court under Section 11 cannot pass any order of

injunction or protective measure. Under Section 9, the Court cannot appoint the Arbitrator pursuance to the

agreement clause though need to consider the existence of the agreement for the purpose of granting interim relief or protection. The Chief Justice or the designated Judge under Section 11 as referred above and as decided by the

Apex Court needs to consider the existence of the agreement, jurisdiction, and arbitrability of the matter/ claim including limitation under various circumstances. However, as recorded in National Insurance Company

Limited vs. Boghara Polyfab Pvt.Ltd. 2009 (4) Bom.C.R. 891, the Apex Court has elaborated the scope an power of

the Chief Justice and or the Designated Court. Therefore, after deciding the existence of arbitration agreement, the

Chief Justice in a given case may refer the matter to the Arbitral Tribunal to decide the issue of limitation and or even the validity or nullity of the Arbitration agreement. Once the Chief Justice decides the existence of Arbitration

agreement, then it is difficult for the Arbitral Tribunal to decide that issue again, unless directed otherwise."

18 The submission that though the Arbitrator has been appointed

and as there was no objection raised at the relevant time and as the

same Trust Deed and clause was referred and as that was the basis of

appointment of Arbitrator, still as rightly contended by the learned

counsel appearing for the Respondent Nos. 1 and 2 that there is no

estoppel and/or the parties/Respondents are not debarred from

raising such objection even at appropriate stage before the Arbitral

Tribunal. Even if that is so, I see there is no reason to consider the

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case of the Petitioner under Section 9 for a simple reason that unless

the Arbitral Tribunal takes decision under Section 16 or otherwise,

prima facie it is sufficient for the Court under Section 9, to consider

that there exists the Arbitration Agreement and the dispute is

arbitrable between the parties. Even otherwise, the parties can agree

for Arbitration, at any stage of the proceedings though they were not

parties to the original arbitration agreement. Whether there exists

Arbitration agreement between the parties in view of clause 20 of the

Trust Deed or the parties agreed to refer the dispute out of the Trust

Deed or otherwise, to settle their dispute, in the present facts and

circumstances, in my view, needs to be decided finally by the

Arbitrator under Section 16 of the Act, if raised, but subject to the

observation as made in Perma Container (supra) based upon National

Insurance Company (supra) & S.B.P. & Co. (supra).

19 Now, whether case is made out for interim relief or not is

another and basic factor. After hearing both the parties, this Court

has not granted ad-interim relief on 24th November, 2009. The parties

proceeded at that time on the basis of denial made in the averments in

the affidavit filed by Respondent Nos. 1 and 2 on the date of hearing.

The learned senior counsel appearing for the Petitioner now referring

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to the reply submitted that there is a case made out to grant an

interim relief in terms of prayer clause (a), (b) and (c) also.

20 A Notice of Motion is taken out by the Petitioner by contending

basically that the minutes of the meeting of board of trustees held on

12th January, 2007 by which, time as referred to Trust Deed has been

extended for further 10 years is a fabricated document. That resulted

into denial of his rights as per the basic agreement/ deed in question

and prevented him from the benefits as provided in trust deed till 24th

March, 2017. The Arbitrator even otherwise cannot decide this issue

of fabrication even if any.

21 The point still remained that the parties have consented, even

the Petitioner, to refer the matter revolving around the Trust Deed. It

also means to decide all the disputes and differences arising out of the

same and including the interpretation of clause 20 and; whether

there exists power to extend such date as referred in the minutes of

meeting dated 12th January, 2007 in question. Having once appointed

the Arbitrator, in my view, unless the Arbitrator decide and interpret

the particular provisions as per the rival contentions of the parties,

subject to objection even if any, the minutes of meeting dated 12th

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January, 2007 just cannot be overlooked. Therefore, the extension so

granted if taken note of, the contention so raised by the Petitioner, in

my view, cannot be adjudicated at this stage in Section 9 Petition for

granting interim relief as per prayer clauses (a) (b) or (c). The

Petitioner is not entitled for any benefit till expiry of extended date

2017. Therefore, no reliefs as prayed.

22 The issue of fabrication, even if as raised that also revolved

around the interpretation of the deed clauses, just cannot be

adjudicated even in this Section 9 Petition, in the present case at this

stage.

23 So far as the point revolving around the shares and misuse of

the rights arising out of the same as contended even if taken note of,

still unless the Arbitrator decide this case and interpret the power of

extension so recorded in the resolution in question and as the

company matter cannot be the subject matter so far as present petition

is concerned. This point also cannot assist the Petitioner to grant

reliefs under Section 9 of the Act. I am not deciding the rights of the

petitioner as available under the Company Laws revolving around the

trust deed, if any, which is again subject to final decision by the

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Arbitrator. However, it is made clear that the Arbitral Tribunal to

decide the contentions in accordance with law uninfluenced by this

judgment.

24 As noted in earlier order dated 24th November, 2009, which

remained intact till this date, in this back ground, and as there is no

balance of convenience and equity lies in favour of the Petitioner,

therefore, keeping all points open, I am not inclined to grant any relief

as prayed in this Petition. The petition is accordingly dismissed.

There shall be no order as to costs.

(ANOOP V. MOHTA, J.)