LexRAJNI SANGHI versus WESTERN INDIAN STATE MOTORS LTD. & ORS.
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[2015] 14 S.C.R. 217 RAJNI SANGHI v. WESTERN INDIAN STATE MOTORS LTD. & ORS. (Civil Appeal No. 3687 of 2006) DECEMBER 01, 2015 [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ~) Arbitration Act, 1940: A B s.30 - Arbitration agreement .between four business C groups owned by four brothers (NK, AK, RK and MK) and their families - For affecting partition of the business into four equal lots - During pendency of the arbitral proceedings company petition filed by MK in Bombay High Court, wherein settlement regarding the partition of the properties was done D between two brothers (MK and RK)-Another company case filed by RK in Rajasthan High Court - Arbitration award passed -AK filed application u/s 17 of Arbitration Act before Delhi High Court to make the award rule of the Court - Rajasthan High Court approved a scheme of reconstruction E and family settlement dated 6.9.1994 arrived at between 3 brothers (AK, RK and NK)-AK undertook therein to withdraw his application u/s. 17 of Arbitration Act- Order of Rajasthan High Court challenged in appeal by fourth brother (MK in Company appeal No.30 of 1994) - Later son of AK also F transposed as appellant - Widowed daughter-in-law of one of the brothers (NK) also challenged the order of Rajasthan High Court (in Appeal No.24 of 1994) - However, subsequently she entered into compromise and settlement in 1995 - Contempt petition against AK for not withdrawing G the application u/s. 17 - Dismissed by Delhi High Court on the ground that the non-withdrawal was not wi/Jful- Delhi High Court set aside the arbitration award in view of the orders of Bombay High Court and Rajasthan High Court - MK withdrew his appeal against the Rajasthan High Court H 217 218 SUPREME COURT REPORTS [2015] 14 S.C.R. A order - However, the appeal continued at the behest of son of AK - Division Bench of Rajasthan High Court allowed the appeals (Appeal Nos.3011994 and 2411994) remitting the matter to Company Judge on the ground of non-compliance of s.391(1) of Companies Act - Appeals to this Court B challenging the orders of Delhi High Court whereby arbitration award was set aside and the contempt petition was dismissed and that of Division Bench of Rajasthan High Court whereby appeal Nos. 30 and 24 of 1994 were partly allowed · - Held: When the courts of competent jurisdiction at Bombay c and Rajasthan were allowed to proceed and decide the family arrangement, the proceedings and orders of those courts cannot be ignored on account of pendency of an award still waiting to be made rule of the Court - The award has to be set aside on the ground that it was otherwise invalid on the o date it was being considered for being made rule of the Court - The agreement/settlement between the parties in 1994 and 1995 approved by Rajasthan High Court and Bombay High Court will prevail over the award as the award had not acquired the status of decree as it was yet not made rule of the Court E as required by Arbitration Act, 1940 -AK not honouring his undertaking to withdraw his application u/s. 17 and attempt by his son to obstruct the scheme of family settlement of 1994 (while his father had signed the settlement as Head of the family) were impermissible conduct of approbate and F reprobate- The status of head of the family as a 'Karta' under Hindu Law deserves to be kept in mind-Junior members of the family are bound by decisions of'Karta' in matters of family business and property unless proved that act of the Karla' was fraudulent and for immoral purpose - Remand of the G appeal by Division Bench of Rajasthan High Court should have been avoided because it was not on the basis of defect in the settlement but on the technical ground - Order of remand set aside - The settlements of 1994 and 1995 are affirmed - Orders passed by Delhi High Court are upheld - H Hindu Law - Companies Act, 1956. RAJNI SANGH Iv. WESTERN INDIAN STATE MOTORS 219 LTD.&ORS. s.30(c)- Ground under, for setting aside award- Scope A of- The ground for setting aside the award is quite wide in its amplitude - Clause (c) of s. 30 does not attract the principle· of 'ejusdem generis' so far as the term 'otherwise invalid' is concerned. Doctines/Principles - Principle of 'ejusdem generis' - B Applicability of. Partly allowing appeal No.3687 of 2006 and dismissing the appeal Nos.2763 of 2002 and 503 of 2001, the Court c HELD:1.1 Clause (c) of Section 30 of Arbitration Act, 1940 does
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