Delhi High Court
Pawan Gupta vs Kamal Gupta & Ors. on 5 July, 2022
$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Reserved on: 03rd June, 2022
Pronounced on: 5th July, 2022
+ O.M.P (I) (COMM) No.186/2022
PAWAN GUPTA .... Petitioner
Represented by: Mr. Maninder Singh & Mr. Sanjeev
Kumar Dubey, Sr. Advocates with
Mr. Prabhas Bajaj, Mr. Karan
Khanna, Mr. Udit Malik, Mr.
Himanshu Satija, Mr. Harshit
Khanduja, Mr. Rajmangal Kumar, Mr.
Rishabh Kr. Thakur, Advocates.
versus
KAMAL GUPTA & ORS. ....Respondents
Represented by: Mr. Ravi Sikri, Sr. Advocate with Mr.
Deepank Yadav, Ms. Akshita Raina,
Mr. Tarun Singhla, Ms. Samprikta
Ghosal, Mr. Mukul Malik, Mr.
Abhishek Shandillya, Advocates
CORAM:
HON'BLE MS. JUSTICE MINI PUSHKARNA
JUDGMENT
MINI PUSHKARNA, J.
I.A. 9427/2022 (filed by the appellant exemption from filing true
typed copies of the dim and/or improperly formatted and/or certified
copies of the documents)
1. Exemption allowed, subject to just exception.
2. Application stands disposed of accordingly.
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O.M.P (I) (COMM) No.186/2022
1. The petitioner has filed the present petition under Section 9 of
the Arbitration & Conciliation Act, 1996, (hereinafter, referred as "the
Act") interalia praying for urgent protective orders with reference to
implementation of a family settlement arrived at between the family
members, to its fullest extent and in the letter and spirit of the terms
and conditions agreed between them.
2. The disputes between the parties have arisen in relation to oral
Family Settlement dated 30.09.2014, which as per the petitioner has
been recorded in the Family Settlement Deed dated 20.06.2015 and
Family Settlement Deed/Memorandum of Understanding dated
09.07.2019 executed by the family members. The petitioner is seeking
urgent reliefs under Section 9 of the Act for preservation of assets
which are falling to the petitioner's share under the binding family
settlement between the family members. After the family settlement,
the family is identified as two groups i.e. Pawan Gupta (PG) Group
and Kamal Gupta (KG) Group.
3. The petitioner is the founding member of the family business of
PP Jewellers Group which is engaged primarily in the business of
manufacturing and sale of gold, precious stones and jewellery.
Subsequently, the business was joined by other family members
including petitioner's elder brother Sh. Kamal Gupta, respondent no. 1
and his family. The family members have incorporated various entities
for operating this business through a number of showrooms and have
also acquired immovable properties as well as valuable movable
assets including stocks of silver/gold/precious
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stones/diamonds/jewellery etc.
4. Certain differences arose between the family members in the
conduct of the family businesses. In order to resolve all such
differences between the family members, a family settlement for
distribution of the assets and liabilities of the family
businesses/properties etc had taken place on 30.09.2014. As per the
case of the petitioner, the family settlement arrived at between the
family members on 30.09.2014, was recorded subsequently in the
family settlement deed dated 20.06.2015. The family members in
continuation of the aforesaid family settlement dated 30.09.2014 and
20.06.2015, also executed MOU/Deed dated 09.07.2019.
5. Under the terms of the family settlement, the share of the
petitioner's family was decided as 23% in the family business, while
the share of petitioner's elder brother and his family was decided as
77% in the family business.
6. As on 30.09.2014, business showrooms of M/s PP Jewellers
Pvt. Ltd. respondent no. 4 were located at four places namely:-
i. Pitampura Showroom [H-5, Netaji Subhash Place, Pitmpura
New Delhi - 110006].
ii. Karol Bagh Showroom [2700, Desh Bandhu Gupta Road].
iii. Sadar Bazar Showroom [Shop No. 674-675, Rani Jhansi
Road, Baratooti, Sadar Bazar, New Delhi].
iv. Chandni Chowk Showroom [1178 Kucha Mahajani,
Chandni Chowk].
7. Under the terms of the family settlement it was agreed that the
Karol Bagh showroom of PP Jewellers shall fall to the share of the
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petitioner, while the other showrooms as on that date shall fall to the
share of his elder brother, respondent no. 1 herein.
8. It was also agreed under the family settlement that the stocks of
gold, precious stones, diamonds, jewellery etc of the family business
as on 30.09.2014 shall get distributed/apportioned between the family
members as per their respective shares i.e. 23% to the share of the
petitioner and 77% to the share of respondent no. 1 and his family.
The summary of stock held by the three entities as on 30.09.2014 was
as under:-
S.No. Entity Stock as on
30.09.2014 [as per
Stock Summary]
1. P.P. Jewellers Pvt. Ltd. Rs. 2,65,71,33,429/-
2. P.P. Jewellers (Delhi) Rs. 45,40,01,120/-
3. P.P. Jewellers (Exports) Rs. 1,88,54,54,889/-
TOTAL Rs. 4,99,65,89,440/-
9. Aggrieved by the non-implementation of the terms of the
aforesaid family settlement, the petitioner has approached this Court
alleging that the petitioner's elder brother, respondent no. 1 has been
acting with grave malice towards the petitioner and is engaging
himself in various acts of omission and commission thereby seeking to
deprive the petitioner of his share in the family business and to
obstruct him in operation of the Karol Bagh showroom.
10. Mr. Maninder Singh, learned Senior counsel appearing for the
petitioner submitted that till date, the stocks have not been distributed
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by respondent no. 1 to the respective family members, as per their
proportionate shares in terms of the family settlement. It was
contended that as on 30.09.2014, as per the stock summary of the
three entities, stocks worth approximately 500 crores were
available with the said three entities, and the petitioner's share of 23%
in the same, comes to approximately 115 crores, as per
gold/jewellery rates of 2014. As per the prevailing rates of
gold/jewellery etc. now, the value of stocks falling to the share of the
petitioner shall be approximately 175 crores.
11. It was also submitted on behalf of the petitioner that having
regard to the lesser share in the family business, the quantum of the
liabilities assigned to the petitioner was "nil", while respondent no. 1
and his family were to discharge the liabilities of the banks in terms of
the family settlement. However, it is contended that respondent no. 1
has proceeded to discharge liabilities towards the banks where assets
falling to his share are encumbered/mortgaged and he has not
undertaken and discharged his liabilities under the family settlement
in relation to the immovable properties/assets falling to the share of
the petitioner. As per the family settlement, the Kamal Gupta group
had the obligation to discharge the liabilities/ borrowing of the group
companies.
12. It has further been contended on behalf of the petitioner that
some of the loans of entities of PP Jewellers group with various banks
appear to have been settled. Thus, total loan of approximately 584
crores as on 30.09.2014 appears to have been settled for an amount of
approximately 200 crores. The benefit of the difference in these
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amounts will also flow to the family members including the petitioner
herein.
13. Post the family settlement on 30.09.2014 and pending its full
and complete implementation by the respondents, the petitioner
continues to be on the Board of Directors and having share holding in
the various joint family companies and share in the immovable
properties and businesses. However, the financial and administrative
control of all the family concerns are under the control and
instructions of respondent no. 1. The petitioner has repeatedly
requested respondent no. 1 to discharge their obligations under the
family settlement so that the petitioner shall have ownership rights and
control over the properties allocated and assigned to his share under
the family settlement. However, respondent no. 1 has avoided full
implementation of the family settlement on one pretext or the other
and has selectively complied with only such terms of the family
settlement which are to his own benefit.
14. It has further been contended that the family settlement is
binding on the parties and has obliged all the parties to take all
necessary steps for enforcement/implementation of the family
settlement. Reference was also made to the judgment of the Hon'ble
Supreme Court in the case of Kale Vs Dy. Director of Consolidation,
(1976) 3 SCC 119 with respect to the binding effect of family
settlement.
15. It was submitted that annexures to the MOU/deed dated
09.07.2019 reiterate the petitioner's share of immovable properties, as
determined and allocated as per the family settlement dated
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30.09.2014 and recorded in the Family Settlement Deed 20.06.2015,
as under:-
A. 2700, Desh Bandhu Gupta Road, Karol Bagh, New Delhi
B. A-19, Block 9A, Jasola Vihar, Delhi
C. Flat No. 89, Second Floor, Lok Vihar Cooperative Group Housing
Society, at Vikas Puri, New Delhi 110018
D. Plot No. 142A/17, NSEZ, Noida, UP-201305
E. House no 224-A New Layalpur, Shahdara Delhi- 110051.
16. Attention of this Court was also drawn to order dated 30.07.2021
passed by Division Bench of this Court in FAO (COMM) 120/2021,
wherein directions had been made to inventorize the entire stock of raw
materials and jewellery lying in the Karol Bagh showroom by
appointment of a Local Commissioner. Thus, it was prayed that a Local
Commissioner may be appointed in the present case also for
inventorising the stocks of gold, diamond jewellery etc held by the three
entities viz PP Jewellers Pvt. Ltd, M/s PP Jewellers (Delhi) and M/s PP
Jewellers (Exports).
17. The learned senior counsel for the petitioner also referred to
document P-20, registered Sale Deed dated 13.10.2021 with respect to
industrial plot in Haryana. It was submitted that the said industrial plot
was owned by M/s Shree Shiv Jewellers Pvt. Ltd., which is a family
concern, of which the petitioner and respondent no. 3, are the only two
directors. In the said company, the petitioner and respondent no. 1 each
have 50% shareholding. The said plot has been sold at an undervalued
rate by way of Sale Deed dated 13.10.2021, without any information or
knowledge to the petitioner.
18. It was strenuously argued on behalf of the petitioner that the
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respondent no. 1 had discharged loan of M/s PP Jewellers Pvt. Ltd
with Axis bank and title documents of the showroom falling to the
share of petitioner i.e. showroom at 2700, Desh Bandhu Gupta Road,
Karol Bagh, had been taken away by respondent no. 1 from the said
bank recently. Instead of handing over the title documents of the Karol
Bagh showroom, these documents have been retained by Sh. Kamal
Gupta for his ulterior motives.
19. Hence, the petitioner had to approach this Court for urgent
relief.
20. Attention of this Court was drawn to Clause 16 of MOU/Deed
dated 09.07.2019, which interalia states as under:-
"In the event of any dispute or differences arising out
or in relation to the interpretation of any clause of this
MOU/Agreement, the same shall be settled by a Sole
Arbitrator to be appointed by mutual consent of the
parties to this Agreement. If any group/party fails to
agree to the name of a Sole Arbitrator, the same shall
be appointed by the Hon'ble Court of Delhi at New
Delhi in accordance with Arbitration and Conciliation
Act, 1996 as amended. The place of Arbitration shall
be at Delhi".
21. On the other hand, Mr. Ravi Sikri, Senior Advocate on behalf of
the respondents has disputed the deed of family settlement dated
20.06.2015. It was argued that the said deed had been signed only by
Kamal Kumar Gupta and Mukesh Gupta and not by rest of the family
members. It was contended that there was no binding family
settlement of 2015. Senior Counsel for the respondents referred to
Para III of Family Settlement Deed/MOU dated 09.07.2019. He
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submitted that it was clearly recorded in the MOU dated 09.07.2019
that only drafts of settlement had been exchanged and that there was
no final and binding settlement between the parties.
22. It was further contended that under the family settlement dated
30.09.2014 as recorded in the alleged family settlement dated
20.06.2015 and MOU/Deed dated 09.07.2019 there was reciprocal
discharge by the petitioner, which has not been satisfied by the
petitioner. Therefore, the petitioner cannot take any advantage of the
aforesaid agreements. Learned Senior Counsel for the respondents
drew the attention of this Court to the summary of borrowings as
recorded in the family settlement deed dated 20.06.2015. As per the
said table, petitioner had taken over shortage of amount of 141
crores. The summary of borrowing as given in the table in alleged
family settlement deed dated 20.06.2015 in the column "Excess
(short) taken over" refers to the amount that was liable to be given
back. Thus, petitioner was liable to pay back 141 crores, which
amount has still not been paid by the petitioner. It was argued that as
per Clause 5 of the said family settlement deed, the said shortage of
amount was to be paid as soon as possible by the petitioner and his
son to the respondent no. 1 which has not been done. For convenience,
Clause 5 of the family settlement deed dated 20.06.2015 is reproduced
as below:-
"5. The party owning the liabilities in excess of the
amount for which he is liable in terms of the annexure
'Business' shall be entitled to receive the amount from
the other party who has owned the liabilities in short of
the liabilities coming to his share in cash as soon as
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possible from the execution of this settlement deed."
23. Further, referring to the said table to summary of borrowings, it
was submitted that total borrowing from the banks was 614 crores and
every group had taken some responsibility to pay the loans. However,
the petitioner had taken "nil" responsibility for repayment of the loan.
24. While referring to the aforesaid Clause 5, learned senior counsel
for the respondents further contended that 23% share in favour of the
petitioner not only referred to assets, but also liabilities of the
petitioner.
25. It was contended on behalf of the respondents that Clause 10 of
the family settlement deed dated 09.07.2019 clearly stipulates that the
assets allocated to the members of the KG and PG group shall be
transferred to the members, signatory to this settlement, only upon
clearing of their respective share of liability. Clause 10 of the family
settlement deed dated 09.07.2019 stipulates as follows:-
"10. That the parties agree that the assets, mentioned in
Annexures C, C-1 and E, identified/allocated to the
members of KG Group and PG Group, shall be
immediately transferred to the member (s), signatory to
this settlement, upon clearing of their respective share of
liability....."
26. Attention of the Court was also drawn to Clause 14(b) of the
Deed/MOU dated 09.07.2019 to contend that the loans had to be paid
both by the Kamal Gupta and the Pawan Gupta group (herein referred
to as "KG and PG group") for their respective share of liabilities,
which is reproduced for ready reference :-
"b. Loans, if any, existing as on 30.09.2014 (only and not
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any new loans availed thereafter) of any Bank, other than
mentioned in the six banks, referred hereinabove, shall be
paid by KG Group and PG Group for their respective
liabilities in the proportion of 77% and 23% to the said
bank from personal/other sources. If any group has taken
any loan or incurred any liability after 30.09.2014, the same
shall exclusively be liability of that group only."
27. As regards the contention of the petitioner regarding payment of
loan to Axis bank and receiving the title documents of showroom at
Karol Bagh, it was submitted that the said loan pertained to PP
Jewellers and not loan against the said showroom. Since 77% share in
the liability was that of the respondents, they paid the said loan and
obtained the title documents of the Karol Bagh showroom being run
by petitioner.
28. It was further submitted on behalf of the respondents that
inventories of the stock of precious metal and stones had already been
prepared at the time of the family settlement, therefore, there was no
question of any re-inventory being done. Further, the order dated
30.07.2021 passed by DB of this Court in FAO (COMM) No.
120/2021 referred to inventory only in the showroom at Karol Bagh.
29. In rejoinder, the learned senior counsel for the petitioner has
contended that though the stock inventory was done in September
2014, however, 23% share of the petitioner in the said stock has still
not been given to him, thus fresh inventory has to be done. He referred
to the deed of family settlement dated 28.06.2015 in order to stress
that it was agreed among the parties that the stock of precious metal
and stones at various showrooms shall be allocated among the parties
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in the respective ratio of the shares of the parties.
30. It has further been contended on behalf of the petitioner that the
loan amount was 614 crores and 23% of the said loan amount
comes to 141 crores. The respondents have settled the loan of 614
crores to the extent of 200 crores. Therefore, 23% of 200 crores
comes to 45 crores. Thus, it was contended that the liability of the
petitioner is only to the extent of 45 crores. It was further contended
on behalf of the petitioner that discharge of liability has nothing to do
with the payment of stock.
31. Both the parties have advanced their submissions at great
length.
32. It is trite to mention that at this stage this Court is not to
adjudicate upon the inter-se disputes between the parties. This Court
is only required to consider whether the petitioner has made out a
prima facie case in his favour. Pending appointment of an Arbitral
Tribunal, it is the endeavour of the Court to preserve the property in
question in proceedings under Section 9 of the Act.
33. The questions whether the deed of family settlement dated
20.06.2015 pursuant to oral agreement between the parties on
30.09.2014, is a binding family settlement or only in the nature of
drafts of settlement exchanged between the parties; whether there was
reciprocal discharge by the petitioner or whether the petitioner has not
discharged his obligations under the family settlements dated
30.09.2014, 20.06.2015 and 09.07.2019, and to what extent, before the
same could be acted upon, are subject matter of dispute to be decided
by the Arbitral Tribunal. This aspect cannot be examined in the
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present proceedings. This issue is left open to be agitated by the
parties before the learned Arbitral Tribunal.
34. It is seen from the documents on record that family settlement
deed/Memorandum of Understanding dated 09.07.2019 was executed
between the parties. The said family settlement deed / MOU contains
an arbitration clause that stipulates that in the event of any dispute or
difference arising out or in relation to the interpretation of any clause
of the said MOU/agreement, the same shall be settled by a sole
Arbitrator to be appointed by mutual consent of the parties to the
agreement. This Court has entertained the present petition on the basis
of the aforesaid clause.
35. A perusal of the family settlement deed/MOU dated
09.07.2019 clearly shows that family members have been categorised
into two groups, namely:-
1. Pawan Gupta (PG) Group.
2. Kamal Kumar Gupta (KG) Group.
37. Clause 4 of the aforesaid deed/MOU dated 09.07.2019
states that the residential house at C-19, Rana Pratap Bagh, an
undivided common property, shall be distributed amongst the
parties in the following shares:-
PG Group-25%, and
KG Group-75%
36. Further, the deed/MOU dated 09.07.2019 states as follows:-
"5. The net asset value of the immovable properties, as on
30.09.2014, were already determined and immovable
properties were earmarked and allocated amongst the KG
Group and PG Group, as on 30.09.2014 as mentioned in
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Annexure C (signed by all the parties), whereas, the assets
allocated to PG group, towards his share of 23% is
mentioned in Annexure C-1 (signed by all the parties) and
the liabilities, as on 30.09.2014, were also identified and
mentioned in the tabular form and annexed as Annexure D
(signed by all the parties). .....
6. The parties agree that for the purpose of this Family
Settlement, since division of assets and liabilities, the net
value of assets and businesses (after taking into account,
liabilities, as on 30.09.2014), were already
determined/divided and accepted by the parties. The assets
allocation in respect of PG Group shall remain as it is, as
shown in Annexure „C‟ with 50% share of 2129-2130,
Gurudwara Road, Karol Bagh, New Delhi. However, KG
Group has rearranged the properties amongst its own
constituent, as detailed in Annexure E.
The assets and businesses shall be divided in accepted lots
between the group members in the following proportion:
For this clause only i.e. for the purpose of division of assets
and value, Kamal Gupta Group (KG Group) will also include
Rahul Gupta, in addition to the persons named hereinabove.
KG Group will receive 77% only, whereas PG Group will
receive 23%.
7. It is further agreed that since the liabilities, as on 30th
September 2014, were already determined (refer Annexure
D), and now apportioned 77% to the KG Group and 23% to
the PG Group, it is agreed that either group shall not be
responsible for the liabilities, if any, created after 30.09.2014
by the other group......"
37. Thus, it is clear that there are joint family properties in which
the petitioner also has share.
38. The respondents have not denied that the title documents with
respect to showroom in Karol Bagh, falling under the share of the
petitioner have been taken by them after clearing the loan of the Axis
Bank. The respondents have only sought to explain the same by
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stating that the loan in question pertained to the company and was not
against the said particular showroom. Similarly, the respondents have
not denied the registered sale deed dated 13.01.2021, which the
petitioner submitted pertained to joint family property and petitioner
being 50% shareholder and director was not even aware of the said
sale.
39. Disputes exist between the parties with respect to
implementation of the family settlement. Therefore, it is necessary to
ensure that the subject matter of the disputes is preserved. In this view
of the matter, the respondents are restrained from selling, transferring,
alienating or creating any third party rights or interests in relation to
the immovable properties falling to petitioner's share and subject
matter of the family partition as recorded in the Family Settlement
Deed/Memorandum of Understanding dated 09.07.2019, including the
showroom located at 2700, Desh Bandhu Gupta Road, Karol Bagh,
New Delhi. Further, directions are also issued to the respondents/their
representatives/employees/agents not to cause any
obstruction/impediment in any manner by whatsoever in the petitioner
utilising the premises bearing no. 2700, Desh Bandhu Gupta Road,
Karol Bagh, New Delhi, for conduct of his business.
40. It is clarified that this order shall operate till such time the
Arbitral Tribunal decides the petitioner's application under Section 17
of the Act, if so filed. If no application under Section 17 is filed by the
petitioner within 4 weeks of the appointment of the Arbitral Tribunal,
the interim order shall lapse.
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41. Mr. Ravi Sikri, learned senior counsel for the respondents has
rightly drawn the attention of this Court to Document P-13, P-14 and
P-15, which are the stock statement as on 30.09.2014 of the three
entities viz PP Jewellers Pvt Ltd., M/s PP Jewellers (Delhi) and M/s
PP Jewellers (Exports). Perusal of the aforesaid documents clearly
show that inventory of the stocks as on 30.09.2014 has already taken
place. Therefore, the interest of the petitioner, if any, as regards his
23% share in the aforesaid stock as inventorized on 30.09.2014, is
secured. Even otherwise, the respondents have denied the alleged
family settlement dated 20.06.2015 contending it to be only a draft.
Therefore, at this stage, it is not considered appropriate to appoint any
Local Commissioner for such purpose. However, the petitioner is at
liberty to move appropriate application before the Learned Arbitrator,
if so advised.
42. Reliance by the petitioner on the order dated 30.07.2021 passed
by Division Bench of this Court in FAO (COMM) 120/2021, is of no
help to the petitioner. The order for appointment of Local
Commissioner in the said case was directed in different circumstances
and in separate proceedings pertaining to the dispute between the
parties relating to use of the trademarks/logos of the respondent
companies. Besides, perusal of the said order shows that the parties
themselves had agreed that entire stock of raw materials and jewellery
lying in the Karol Bagh showroom should be inventorised.
43. At this stage, it may be relevant to refer to the judgment in the
case of Arcelor Mittal Nippon Steel India Limited Vs Essar Bulk
Terminal Limited, (2022) 1 SCC 712, wherein the Hon'ble Supreme
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Court has held as follows:;
"63. To discourage the filing of applications for interim
measures in courts under Section 9(1) of the Arbitration
Act, Section 17 has also been amended to clothe the
Arbitral Tribunal with the same powers to grant interim
measures, as the Court under Section 9(1). The 2015
Amendment also introduces a deeming fiction, whereby an
order passed by the Arbitral Tribunal under Section 17 is
deemed to be an order of court for all purposes and is
enforceable as an order of court."
44. Accordingly, the present petition is partly allowed in the
aforesaid terms.
45. It is clarified that all rights and contentions of the parties are
reserved. Nothing contained in this order be construed as an
expression of opinion on the merits of the disputes between the
parties.
(MINI PUSHKARNA)
JUDGE
JULY 05, 2022
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