SHRI VIMAL KISHOR SHAH & ORS. versus MR. JAYESH DINESH SHAH & ORS.

Citation: [2016] 7 S.C.R. 102 · Decided: 17-08-2016 · Supreme Court of India · Bench: JASTI CHELAMESWAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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[2016] 7 S.C.R. 102 
SHRI VIMAL KISHOR SHAH & ORS. 
v. 
MR. JAYESH DINESH SHAH & ORS. 
(Civil Appeal No. 8164 of2016) 
AUGUST 17, 2016 
[J. CHELAMESWAR AND ABHAY MANOHAR SAPRE, JJ.) 
Arbitration and Conciliation Act, 1996 - ss.2(b), 2(h), 7 and 
11 - Application u/s. 11 for appointment of arbitrator - In view of 
arbitration clause in a Trust Deed - For resolving the dfapute 
between the beneficiaries - Maintainability of the application -
Held: Application u/s. 11 is maintainable only when there is valid, 
binding and enforceable 'arbitration agreement' within meaning of 
s. 7 of the Act - The Trust Deed including the arbitration clause 
does not satisfj; the requirements u/ss. 2(b), 2{h) rlw. s. 7 and hence 
cannot be construed as an 'arbitration agreement' inter se 
beneficiaries within the meaning of s. 7 - Trust Act specifically 
provides forjurisdiction of civil court in respect of disputes regarding 
the trust, thus impliedly excludes applicability of Arbitration Act -
Therefore, the application uls. 11 is not maintainable - Trust Act, 
1882. 
Interpretation of Statutes: 
The law which ousters jurisdiction of courts, cannot be 
inferred readily - It requires strict rule of interpretation. 
1f a statute provides for a specific remedy, it thereby forbids a 
remedy of any other form than that given in the statute. 
Allowing the appeal, the Court 
HELD: 1.1 In order to constitute a valid, binding and 
enforceable arbitration agreement, the requirements contained 
in Section 7 have to be satisfied strictly. These requirements, 
apart from others, are (I) there has to be an agreement (2) it has 
to be in writing (3) parties must sign snch agreement or in other 
words, the agreement mnst bear the signatures of the parties 
concerned and (4) snch agreement mnst contain an arbitration 
clanse. Failure to satisfy any of the four conditions would render 
the arbitration agreement invalid and unenforceable and, in 
consequence, would resnlt in dismissal of the application filed 
102 
SHRI VIMAL KISHOR SHAH & ORS. v. MR. JAYESH DINESH 
SHAH & ORS. 
under Section 11 of the Act at its threshold. The Trust Deed 
including the arbitration clause does not satisfy the requirements 
of Section 2(b) and 2(h) read with Section 7 of the Act and hence, 
the Trust Deed cannot be construed as an "arbitration agreement" 
within the meaning of Section 7 of the Act. [Paras 23, 24, 35] 
[111-G-H; 112-A-B; 116-C-D] 
Vijay Kumar Sharma Alias Manju v. Raghunandan 
Sharma Alias Baburam & Ors. 2010 (1) SCR 582 : 
2010 (2) sec 486 - relied on. 
Bijoy Ballav Kundu & Anr. v. Tapeli Ranjan Kundu, 
AIR 1965 Calcutta 628 - approved. 
1.2 There is always a proposal and then its acceptance in 
the case of every agreement, which is not required in the case of 
creation of the Trust becnuse in the case of a Trust, the trustee 
and beneficiary though accept its creation but by such acceptance, 
they merely undertake to carry out' the terms of the Trust Deed 
in so far as the same may be in accordance with law. The clause 
relating to arbitration in the Trust Deed is one of the several 
clauses. The other clauses which deal with several types of 
directions to the trustees and beneficiaries such as how the Trust 
should be managed, how the amount of the Trust should be spent 
etc. are not in the nature of agreement between the trustees 
or/and beneficiaries. In other words, by accepting the Trust Deed, 
it cannot be said that the trustees or beneficiaries have agreed 
amongst themselves as to how they should spend the money or 
how they should manage the affairs of the Trust or receive any 
benefit. There cannot, therefore, be any agreement inter se 
trustees or beneficiaries to carry out any such activity. If that 
were to be so then the trustees/beneficiaries would have to give 
proposal and acceptance in respect of each clause of the Trust 
Deed inter se. It would be then a sheer absurdity and hence such 
situation, cannot be countenanced. [Paras 41 and 42] [119-D-G] 
1.3 The clause in an agreement, which provides for deciding 
the disputes arising out of such agreement through private 
arbitration, affects the jurisdiction of the Civil Court and the 
ouster of jurisdiction of Courts cannot be inferred readily. The 
Arbitration Act is one such law, which provides for ouster of 
jurisdiction of the Civil Courts. The Act, inter "Ii", provides a 
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SUPREME COURT REPORTS 
[201

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