K.K. MODI versus K.N. MODI AND ORS.

Citation: [1998] 1 S.C.R. 601 · Decided: 04-02-1998 · Supreme Court of India · Bench: SUJATA V. MANOHAR · Disposal: Disposed off

Cited by 9 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

K.K. MODI 
A 
v. 
K.N. MODI AND ORS. 
FEBRUARY 4, 1998 
[MRS. SUJATA V. MANOHAR AND D.P. WADHWA, JJ.] 
B 
Arbitration Act, 1940: Section 2(p). 
Arbitration agreement-Attributes of~Decision or Award-
Memi:Jrandum of Understanding (MOU)-Recorded family settlement of C 
.disputes as regard division of assets between two groups of the same family-
&perts were appointed for valuation and preparing a scheme for division 
· · of companies owned by the family between the two groups-Clause 9 of the 
MOU provided that disputes, clarifications etc. in respect of implementation 
of MOU would be referred to the Chairman, Industrial Finance Corporation 
of India Ltd. (IFCI), whose decision would be final and binding-Accordingly, D 
the Chairman gave his decision-Held: Attributes of arbitration agreement 
are: &istence of disputes; choosing of tribunal or forum; binding nature of 
its decision and judicial determination of decision-MOU is not an arbitration 
agreement but only a reference of disputes for decision by an expert-Hence, 
such a decision is not an arbitration award-Arbitration and Conciliation E 
Act, 1996, S.7. 
Code of Civil Procedure 1908: Order 6 Rule 16. 
Abuse of process of court-Meaning of-Two parallel proceedings were 
instituted by a party on the same day-One under S.33 of Arbitration Act and F 
the other by way of a suit challenging the said decision in case it was held 
in the first proceeding that the decision was not an arbitration award-
Several prayers were identical in both the proceedings-Held: Re-litigation 
on the same issue, whether or not barred as res judicata, is an abuse of the 
process of court-Court has discretion to strike out the pleadings if it is G 
satisfied that there is no chance of the suit succeeding-However, court 
should exercise its jurisdiction sparingly only in special cases-Hence, the 
plaint in the suit to the limited extent that it raised an alternative independent · 
plea, is not an abuse of the process of the court-But the plaint insofar as 
it challenged the decision as an arbitration award is an abuse of the process 
1 of the court-Arbitration Act, 1940, S.32. 
601 
H 
602 
SUPREME COURT REPORTS 
[1998] 1 S.C.R. 
A 
Hindu Law: 
B 
c 
F amity settlement-MOU arrived at between two groups of same family 
regard to division of assets-Held: The family settlement is different from an 
ordinary contract-Court should not lightly interfere with such a family 
settlement especially when it has been acted upon by the parties. 
Words Phrases: 
"Abuse of the process of the court"-Meaning of-In the context of 0.6 
Rule 6 of the Code of Civil Procedure, 1908. 
The appellant and respondents belong to the same family and own or 
have controlling interest in a number of public limited companies and also 
own various assets. Differences and disputes has arisen between the appellant 
and his. sons constituting on the one hand Group B and respondent 
constifuting Group A on the other. To resolve these differences, negotiations 
D took place with the help of the financial instifutions which had lent money 
to these companies, representatives of several banks, RBI etc. and ultimately 
a Memorandum of Understanding (MOU) was arrived at between Group A and 
Group R The MOU recorded a settlement arrived at between the two Groups 
in terms of which the shares and assets of various companies were required 
to be valued in the manner specified in the agreement. The valuation was to 
E be done by a private company. Three companies, which have to be divided 
between the two groups were to be divided in accordance with a scheme to 
be prepared by another private compllJly. l'un1lant to the MOU the two private 
companies gave their reports. In the implementation of the MOU which was . 
to be done in consultation with the financial institutions, Clause 9 of the 
F MOU stipulated that disputes or clarifications relating to implementation. 
were to be referred to the Chairman, Indusbial Finance Corporation of India 
Ltd. (IFCI) or his nominees whose decision would be final and binding. 
The members of both the Groups were dissatisfied with the report of 
the private companies. They sent various representations to the Chairman, 
G IFCI in view of Oause 9 of the MOU. The Chairman, IFCI formed a Comlliittee 
of Experts to assist him in deciding the questions that arose and gave his 
detailed decisiontreport. The Chairman, IFCI described this report as his 
decision on each dispute raised or clarification sought 

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