TMI Blog1998 (2) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... was his decision an award. In a proceeding under the Arbitration Act, the appellants could not have raised an alternative plea that in case the impugned decision is treated not as an award. but as a decision, the same is bad in law. This plea could only have been raised by filing a separate suit. Similarly in the suit, the appellants could not h ave raised an alternative plea that in case the impugned decision is considered as an award, the same should be set aside. For this purpose an arbitration petition was required to be filed. Therefor, the suit, if and to the extent that it challenges in accordance with law, the impugned decision as a decision, cannot be treated as an abuse of the process of the court. - C.A. 613 OF 1998 - - - Dated:- 4-2-1998 - SUJATA V. MANOHAR AND D.P.WADHWA, JJ. JUDGMENT Leave granted in Special Leave Petition Nos. 14905 and 18711 of 1997. The present litigation has arisen on account of dispute between Seth Gujjar Mal Modi's five sons - K.K.Modi, V.K. Modi, S.K.Modi. B.K.Modi and U.K.Modi on the one hand (hereinafter referred to as `Group B') and Kedar Nath Modi, the younger brother of Seth Gujjar Mal Modi and his three sons - M.K.Modi a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the date for carrying out valuation, the date of transfer the appointment of independent Chairmen of these companies which are to be split and certain other matters specified in the Memorandum of Understanding shall be done consultation with the Chairman, Industrial Finance Corporation of India (IFCI). Clause 9 provides as follows:- "Implementation will be done in consultation with the financial institutions. For all disputes, clarifications etc, in respect of implementation of this agreement, the same shall be referred to the Chairman, IFCI or his nominees whose decisions will be final and binding on both the groups." Pursuant to the Memorandum of Understanding, M/s S.B. Billimoria Company gave reports between January and March 1991. M/s Bansi S. Mehta Company who were required to provide a scheme for splitting of the three companies by taking into account the valuation fixed by M/s S.B. Billimoria Company, also sent various reports between November 1989 and December, 1994. The members of both the Groups were dissatisfied with these reports. They sent various representations to the Chairman and Managing Director of the Industrial Finance Corporation of India Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 (Group A) from selling and/or transferring and/or disposing of, in any manner, the shares held by them in Godfrey Phillips India Limited until further orders. From this ad-interim order a special leave petition was preferred by the respondents which was dismissed by this Court on 3.6.1996 on the ground that it was only an ad interim order. Interim application I.A 4550 of 1996 in Arbitration Petition O.M.P. No. 58 of 1996 was heard and disposed of by the Delhi High Court by its impugned judgment dated 11th of February, 1997. A learned Single of the Delhi High Court held b y the said judgment that the decision of the Chairman and Managing Director, IFCI dated 8.12.1995 cannot be considered as an award in arbitration proceedings. The parties did not have any intention to refer any disputes to arbitration. All the disputed were settled by the Memorandum of Understanding dated 24th of January, 1989 and what remained was only the valuation of shares and division of the three companies as agreed to in the Memorandum of Understanding. In order to avoid any disputes, the parties had agreed that the Chairman and Managing Director, IFCI would issue all clarifications and give his decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any matter. S.L.P.(Civil) No. 18711/1997 is filed before us from this impugned order of 15th of September, 1997. Thus we have before us S.L.P. (Civil) No. 14905/1997 from the judgment and order of the learned Single Judge of the Delhi High Court dated 11.2.1997 in I.A 4550 of 1996 in arbitration petition O.M.P. No. 58 of 1996. We h ave also before us S.L.P. (Civil) No. 18711 of 1997 from the order of the Division Bench of the Delhi High Court dated 15.9.1997 in C.M. 1270 of 1997 under which the interim order of 13.3.1997 is revived. By consent of parties, R.F.A. (OS) 41 of 1997 has also been transferred to us being T.C.(civil) No. 30 of 1997 for consideration. All these three proceedings have been heard together. During the pendency of S.L.P. (Civil) No. 18711 of 1997, in I.A. No.3 we have b y our ad-interim order dated 18.11.1997 varied t he interim order of 13th of March, 1997 to the following effect: "Until further orders no meeting of the Modipon Board shall be held for considering any matter relating to decision of the C.M.D., IFCI dated 8.12.1995 or concerning the sale of shares held in Godfrey Philip India Limited." Thereafter, on 7th of January, 1998 after hearing bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not conclusive on the point. Among the attributes which must be present for an agreement to be considered as an arbitration agreement are : (1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to t he agreement, (2) That the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the Court or from a statute, the terms of which make it clear that the process is to be an arbitration, (3) The agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal, (4) That the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides, (5) That the judgment of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly, (6) The agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal. The other factors which are relevant include, whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the parties have agreed to resolve disputes through arbitration. Therefore our courts have laid emphasis on (1) existence of disputes as against intention to avoid future disputes; (2) the tribunal or forum so chosen is intended to act judicially after taking into account relevant evidence before it and the submissions made by the parties before it; and (3) the decision is intended to bind the parties. Nomenclature used by the parties may not be conclusive. One must examine the true intent and support of the agreement. There are, of course, the statutory requirements of a written agreement, existing or future disputes and an intention to refer them to arbitration. (Vide Section 2 Arbitration Act 1940 and Section 7 Arbitration and Conciliation Act, 1996). In the case of Smt. Rukmanibai Gupta v. Collector, Jabalpur Ors. [(1980) 4 SCC 556], this Court dwelt upon the fact that disputes were referred to arbitration and the fact that the decision of the person to whom the disputes were referred was made final, as denominative of the nature of the agreement which the court held was an arbitration agreement. In the case of State of U.P. v. Tipper Chand [(1980) 2 SCC 341], a clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her party for decision. He was also required to act judicially and decide the disputes after hearing both parties and after considering the material before him. It was, therefore, an arbitration agreement. In the case of Jammu and Kashmir State Forest Corporation v. Abdul Karim Wani Ors. [(1989) 2 SCC 701 para 24], this Court considered the agreement as an agreement of reference to arbitration. It has emphasised that (1) the agreement was in writing; (2) It was a contract at present time to refer the dispute arising out of the present contract; and (3) There was a valid agreement to refer the dispute to arbitration of the Managing Director, Jammu and Kashmir State Forest Corporation. The Court observed that endeavor should always be made to find out the intention of the parties, and that intention has to be found out by reading the terms broadly and clearly without being circumscribed. The decision in the case of Rukmanibai Gupta (supra) has been followed by this Court in the case of M.Dayanand Reddy v. A.P. Industrial Infrastructure Corporation Limited Ors. [(1993) 3 SCC 137 para 8], Commenting on the special characteristics of an arbitration agreement this court h as furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the valuers should, before they proceed to act, appoint an umpire. The court said that such valuation was not in the nature of an award. The court applied the tests which we have already referred to, namely, (1) Whether the terms of the agreement contemplated that the intention of the parties was for the person, to hold an enquiry in the nature of a judicial enquiry, hear the respective case of the parties and decide upon evidence laid before him, (2) Whether the person was appointed to prevent differences from arising and not for settling them when they had arisen. The court held the agreement to be for valuation. It said that the fact that if the valuers could not agree as to price, an umpire was to be appointed would not indicate that there were any disputes between the parties. In the case of Sutcliffe v. Thackrah [1974 (1) AER 859], the clause in question provided that at specified intervals the architect should issue interim certificates stating the amount due tot he builders in respect of work properly executed. There was a separate arbitration clause. The question was whether the function of the architect was sufficiently judicial in character for him to escape liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree companies which have to be divided between the two groups are to be divided in accordance with a scheme to be prepared by Bansi S. Mehta Co. In the implementation of the Memorandum of Understanding which is to be done in consultation with the financial institutions, any disputes or clarifications relating to implementation are to be referred to the Chairman, IFCI or his nominees whose decision will be final and binding. The purport of Clause 9 is to prevent any further disputes between Groups A and B. Because the agreement requires division of assets in agreed proportions after their valuation by a named body and under a scheme of division by another named body. Clause 9 is intended to clear any other difficulties which may arise in the implementation of the agreement by leaving it to the decision of the Chairman, IFCI. This clause does not contemplate any judicial determination by the Chairman of he IFCI. He is entitled to nominate another person for deciding any question. His decision has been made final and binding. Thus, Clause 9 is not intended to be for any different decision that what is already agreed upon between the parties to the dispute. It is meant for a proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of any specific disputes by the parties to him. The finality of the decision is also indicative of it being an expert's decision though of course, this would not be conclusive. But looking at the nature of the functions expected to be performed by the Chairman, IFCI, in our view, the decision is not an arbitration award. The learned Single Judge was, therefor, right in coming to the conclusion that the proceedings before the Chairman, IFCI, were not arbitration proceedings. Nor was his decision an award. Appeal arising out of Special Leave Petition No. 14905 of 1997 is, therefore, dismissed with costs. Question No. 2: The next question which requires to be decided related to Suit No. 1394 of 1996. The learned Single Judge has struck off the plaint in the suit as being an abuse of he process of court. The appellants had filed this suit in the Delhi High Court on the same day as Arbitration Petition bearing O.M.P. No.58 of 1996. It challenges the same decision of the Chairman, IFCI which is challenged in the arbitration petition as an award. The learned Single Judge has compared the plaint in the suit with the petition filed under the Arbitration Act. The prayers in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the shares of Modi Group Company allotted to Group B held by Modipon Ltd, is vested in the plaintiff and the control and management of the remainder of the company including the Fibre Division is vested in the Group A. The paragraphs in the plaint and in the arbitration petition are verbatim that same to a substantial extent. The respondents have pointed out that paragraphs 1A to 54A in the petition are the same as paragraphs 1 to 54A in the plaint. The grounds which are set out in the petition as well as in the plaint are also substantially the same. Mr. Nariman, learned senior counsel for the appellants, however, has drawn our attention to paragraph 55 of the plaint. In paragraph 55 it is stated as follows: "The plaintiff says and submits that as the said Ruling/Decision of the CMD, IFCI is an Arbitration Award within the meaning of the Arbitrator Act, 1940, the legality and validity of the same can be questioned and a prayer can be made for setting aside that said award only in an arbitration petition filed under Section 33 of the Arbitration Act, 1940. The Plaintiff is, therefore, filing along with the present suit an Arbitration Petition under the provisions of he Arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from being used as a means of vexation and oppression in the process of litigation........ The categories of conduct rendering a claim frivolous, vexatious or an abuse of process are not closed but depend on all the relevant circumstances. And for this purpose considerations of public policy and the interests of justice may be very material." One of the examples cited as an abuse of the process of court is re-litigation. It is an abuse of the process of the court and contrary to justice and public policy for a party to re-litigate the same issue which h as already been tried and decided earlier against him. The re-agitation may or may not be barred as res judicata. But if the same issue is sought to be re-agitated, it also amounts to an abuse of the process of court. A proceeding being filed for a collateral purpose, or a spurious claim being made in litigation may also in a given set of facts amount to an abuse of the process of the court. Frivolous or vexatious proceedings may also amount to an abuse of the process of court especially where the proceedings are absolutely groundless. The court then has the power to stop such proceedings summarily and prevent the time of the pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The perception of the Learned Judge may be substantially correct throughout entirely so. Undoubtedly, if the plaint in the suit is viewed as challenging only the arbitration award, a suit to challenge the award would be re-litigating the issues already raised in the arbitration petition. The suit would also be barred under Section 32 of the Arbitration Act, 1940. Section 32 of the Arbitration Act, 1940 provides that notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award b e set aside, amended, modified or in any way affected otherwise than as provided in this Act. According to the appellants, however, the suit is not confined only to challenging the award or steps taken pursuant to the award by the Chairman, Modipon Ltd. in order to enforce it. According to the appellants, in the suit there is an alternative plea that if the impugned decision of the Chairman and Managing Director, IFCI is not considered as an awards, then that decision as a decision should be set aside. It is contended that the suit, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup A or Group B have been finally settled and adjusted. Where it has become necessary to split any of the existing companies, this has also been provided for in Memorandum of Understanding. It is a complete settlement, providing how assets are to be valued, how they are to be dividing some of the specified companies has to be prepared and who has to do this work. In order to obviate any dispute, the parties have agreed that the entire working out of this agreement will b e subject to such directions as the chairman, IFCI may give pertaining to the implementation of Memorandum of Understanding. He is also empowered to give clarifications and decide any differences relating tot he implementation of the Memorandum of Understanding. Such a family settlement which settled disputes within the family should not be lightly interfered with especially when the settlement has been already acted upon by some members of the family. In the present case, from 1989 to 1995 the Memorandum of Understanding has been substantially acted upon and hence the parties must be held to the settlement which is in the interest of the family and which avoids disputes between the members of the family. Such set ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
