1 arbp987.09.sxw ssm IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ARBITRATION PETITION NO. 987 OF 2009 Souren Chander Alimchandani, Adult, Indian Inhabitant, residing at 33, 3rd Floor, Advent, General J. Bhosale Marg, Mumbai-400 021. ....Petitioner. Vs. 1 Chander Rupchand Alimchandani Adult, Indian Inhabitant, residing of 30, Gulmarg, Napean Sea Road, Mumbai-400 006. 2 Nirmala Chander Alimchandani, Adult, Indian Inhabitant, residing of 30, gulmarg, Napean Sea Road, Mumbai-400 006. 3 Abhin Chander Alimchandani, Adult, Indian Inhabitant, residing of 26 Gulmarg, Napean Sea Road, Mumbai-400 006. ....Respondents. Mr. Pravin Samdhani, Sr. Advocate with Mr. Kunal Mehta i/by M/s. Wadia Ghandy for the Petitioner. Mr. Haresh Jagtiani, Sr. Advocate with Mr. Siddhesh S. Bhole, Mr. Anil D’Souza and Ms. Nisha Srinivasan i/by Mr. Yashpal M. Jain for Respondent Nos. 1 and 2. Mr. J.P. Sen, i/by Mr. Ravi Rattesar for Respondent No. 3. 2 arbp987.09.sxw ssm CORAM : ANOOP V. MOHTA, J. DATE : 16th December, 2010 ORAL JUDGMENT:- The Petitioner has invoked Section 9 of the Arbitration and Conciliation Act, 1996 (for short, the Act). It was filed on 18th November, 2009 for interim reliefs; (a) appointment of Receiver of the original share certificates and (b) dealing with the same in any manner till the final award and pending the Arbitration Proceedings and also prayed for injunction in terms of prayer clause (c) from exercising voting rights in respect of the trust shares constituting 11.47% of the shareholding of the company at the AGM of the company which was fixed on 24th November, 2009. 2 After hearing both the parties, on 24th November, 2009, while admitting the Petition, this court not granted prayer clause (c) by observing as under: “5 Admittedly, there is a clause/provision in the trust deed itself, which provides an authorizes the trustees, in a given case, to extend the said period also. There is a resolution of a minutes of meeting of the board of trustees of the trust held on 12th January, 2007 by which the trustees have decided to extent the said period unanimously, to retain peace and harmony, for further period of 10 years i.e till 24th March, 2017. The same is 3 arbp987.09.sxw ssm supported by an affidavit filed by; Respondent No.2 dated 24/11/2009. The learned counsel appearing for the Petitioner, however, disputing the same. The learned counsel appearing for the Petitioner proceeded with the matter on the basis of denial to the affidavit filed in reply by the respondents. At present, unless it is adjudicated finally, I am inclined to accept this resolution against the Petitioner, whereby the trustees who are the parents of the beneficiaries and in the interest of family peace and harmony, have decided to extend the maturity period. The Petitioner at this stage, is not entitled to any relief by overlooking this basic documents.” 3 The matter is now listed for final hearing. There are no basic changes in circumstances, except the fact that, now the AGM is fixed on 21st December, 2010. 4 The Petitioner and Respondent No.3 are brothers the beneficiaries of a “Alimchandani Family Trust” (the trust) in question. On 24th March, 1982, an Indenture (the trust deed) was made between one Mrs. Indira Bihari Ahuja (the Settler) and Mrs. Nirmala Chander Alimchandani and Mr. Chander Rupchand Alimchandani i.e. Respondent Nos. 1 and 2 respectively (the parents). The Petitioner has 50% share and so also Respondent No.3, as they were minors, subject to expiry of 25 years, as recorded. Therefore, from 25th March, 2007, as per clause 3 of the Trust Deed, the Petitioner and Respondent No.3 are entitled to be possessed of all Trust funds 4 arbp987.09.sxw ssm constituting a corpus of the said Trust. The Petitioner is also entitled to a transfer in his favour of his shares of the Corpus 2448 fully paid- up equity shares, constituting approximately 5.74% of the shareholding of the company on and from 25th March, 2007. In spite of the repeated requests, Respondent Nos. 1, 2 and 3 failed to give effect to the Trust. Therefore, the disputes. 5 Clause 20, which is the basic clause of Arbitration, is reproduced as under. “20. Subject to contents of clause 9 of this Trust Deed, every dispute or differences regarding the interpretation of any of the clauses or provisions or the contents of this Trust Deed or between the Trustees, or the Trustees and Beneficiaries or the beneficiary inter-se regarding the rights, titles or interest flowing or arising from this Trust Deed or consequential thereto, shall be referred to arbitration of sole arbitration of Shri of any on whom he nominates and such nomination is intimated to the Trustees in writing, and in the absence of or refusal of Shri to act as sole arbitration for any reason whatsoever to one or more arbitrators as may be appointed by the trustees and such disputes as differences shall be resolved in pursuance of the provisions of Indian Arbitration Act, 1940 or any other statute in force in its place and the decision of Arbitrator or Arbitrators, as the case may be shall be final and binding on the parties to such arbitration.” 5 arbp987.09.sxw ssm 6 Admittedly, the Petitioner and Respondent No.3 were minors/beneficiaries as referred above. The Deed/ Indenture admittedly signed by the Settler and the Trustees and not by the beneficiaries. 7 The petition under Section 9, though filed in the year 2009 based upon this alleged arbitration clause, yet there was no specific objection raised, at any point of time, about the maintainability of the Petition for want of Specific Arbitration clause between the parties as contemplated under Section 7 read with Section 9 of the Act. No such issue was raised when interim relief was refused on 24th November, 2010. In the meantime, as Respondent Nos. 1, 2 and 3 failed to appoint any Arbitrator, an Application under Section 11 of the Act was filed. All the respondents being parties filed a reply to the Application. Admittedly, the basis for appointment of the Arbitrator, as averred in the Petition revolve around clause 20 of the Trust Deed. By an order dated 21st October, 2010, an Arbitrator has been appointed and the Application was accordingly disposed of. 8 The learned counsel appearing for Respondent Nos. 1, 2 and 3 has raised a preliminary objection at the final hearing stage, that as 6 arbp987.09.sxw ssm the Petitioner is not signatories to the Trust Deed and therefor cannot invoke Section 9 for any interim reliefs. Respondent No.3 was also not signatories to the said Trust deed. It is only signed by Respondent Nos. 1 and 2, and the settler and are only the parties to the Trust Deed. Therefore, on the sole ground, the present Petition need to be dismissed and there is no question of granting any interim relief in terms of prayer clauses (a), (b) and even (c). The reliance is placed upon the following citations:- 1 SBP & Co. Vs. Patel Engineering Ltd. & Anr (2005) 8 S.C.C. 618; 2 Vijay Kumar Sharma @ Manju Vs. Raghunandan Sharma @ Baburam & Ors., 2010 (3) Mh.L.J. 1 (SC) 3 Ms. Chhaya Shriram Vs. Deepak C. Shriram & Ors. 150(2008) DLT 673 (NULL). 9 In answer to this, the learned senior counsel appearing for the Petitioner has relied on the submission that in view of clause 20 as reproduced above, there is a privity of contract and that clause itself provides for settlement of dispute arising out of dispute between the trustees as well as the beneficiaries. Therefore, this Trust Deed itself is sufficient to consider though the Petitioner and Respondent No.3 7 arbp987.09.sxw ssm are not signatories, to the said Trust Deed, as contemplated under Section 2(7) and 9 of the Act. The Petition is maintainable as an arbitrator has been already appointed by the Court. 10 There is no dispute considering the scope of Section 9 of the Act that it is necessary for the Court to decide before granting any relief to consider that there exists a Arbitration Agreement between the parties and there also exists Arbitrable issues arising out of the same. Therefore, no further discussion is necessary, so far as SBP & Company (supra) is concerned. 11 In Vijay Kumar Sharma (supra) the case was of an alleged Will which nowhere provided for any Arbitration clause. There was a dispute even with regard to the existence of the Will. The validity of Will itself was pending. The finding was that there was no Arbitration agreement between the parties and therefore under Section 11 of the Act, no question of appointment of an Arbitrator. The facts are totally distinct and distinguishable. 12 Ms. Chhaya Shriram (Supra) this is a case under Section 11 of the Act in connection with the Trust deed. In that case also, the 8 arbp987.09.sxw ssm Applicant and the Respondents were neither settler nor trustees of the Trust. They were only the beneficiaries of the Trust. The issue was whether such beneficiaries are also entitled to invoke Arbitration clause provided in the Trust Deed to settle the so called disputes. After considering the scope and purpose of the Act, as well as, the Trust Deed and the rights of beneficiaries who were admittedly not signatories to the same, it is held that the dispute between the Applicant and the Respondent could not have been resolved by the Arbitrator as they were not bound by the Arbitration clause. Therefore not appointed the Arbitrator under Section 11 Petition. 13 The present case is quite similar, but additional factor here is that admittedly this Court in Application under Section 11 of the Arbitration Act, though contested by filing affidavit, but ultimately the Arbitrator has been appointed. This factor is also relevant to consider the scope and purpose of Section 9 in a case where for whatever may be the reason, the Arbitrator has already been appointed. 14 Section 9 itself contemplates, if a case is made out to grant an interim protection/ relief, pending the final adjudication and/or passing of award by the Arbitrator. Therefore, whether there exists 9 arbp987.09.sxw ssm valid agreement between the parties, in my view, in the present facts and circumstances of the case cannot be re-adjudicated in the petition under Section 9 of the Act, as submitted by the senior counsel appearing for the respondents. 15 The situation and the field under Sections 9 & 11, as rightly submitted by the learned senior counsel appearing for Respondent Nos. 1 and 2, are different, but the fact that the parties have already invoked Section 11, pending Section 9 Petition and the Arbitrator has already been appointed and as the parties are not prevented and/or debarred from raising objection to the existence and/or validity of the Arbitration agreement under Section 16 of the Act, there is no reason to decide that issue in Section 9 Petition. There will be a clear conflict of the power and jurisdiction if any decision is taken in Section 9 Petition, now at this stage, when admittedly the parties are at liberty in view of Section 16 to raise the same before the Arbitral Tribunal. 16 We have in Sandip Industries & anr. vs. Superpack & anr., 2009 (Supp.) Bom. C.R. 285, while dealing with Sections 11 and 16 of the Act read with SBP & Co. vs. Patel Engineering Limited & anr., 2006(1) 10 arbp987.09.sxw ssm Bom.C.R. 585, observed as under: “4 A Constitutional Bench of the Apex Court in (SBP & Co. vs. Patel Engineering Limited & another), reported in 2006(1) Bom.C.R. 585 (S.C.) (C.B.) : 2005 DGLS (soft) 530 : A.I.R. 2006 S.C. 450 : 2005 (8) S.C.C. 618, while dealing with section 11(6) & (7) and section 16 of the Arbitration Act has observed as under:- “19 Section 16 is said to be the recognition of the principle of Kompetenz-Komopetenz. The fact that the Arbitral Tribunal has the competence to rule on its own jurisdiction and to define the contours of its jurisdiction, only means that when such issues arise before it, the Tribunal can and possibly, ought to decide them. This can happen when the parties have gone to the Arbitral Tribunal without recourse to section 8 or 11 of the Act. But where the jurisdictional issues are decided under these sections, before a reference is made, section 16 cannot be held to empower the Arbitral Tribunal to ignore the decision given by the Judicial Authority or the Chief Justice before the reference to it was made. The competence to decide does not enable the Arbitral Tribunal to get over the finality conferred on an order passed prior to its entering upon the reference by the very statute that creates it ....” 9 Therefore, taking overall view of the scheme of section 16, one thing is very clear that Arbitrator has power to decide the applications with regard to the existence of Arbitration agreement and objection in respect of jurisdiction.” 17 I have already observed in Perma Container (UK) Line Ltd. vs. Perma Container Line (India) Pvt.Ltd. & ors., 2010(2) Bom.C.R. 419 while dealing with Sections 9, 11 and 16 of the Act, as under: 11 arbp987.09.sxw ssm “20 The scope and purpose of Sections 8, 9, 11, 16 and 45 of the Act, are totally different in all respect. The Court under Section 11 cannot pass any order of injunction or protective measure. Under Section 9, the Court cannot appoint the Arbitrator pursuance to the agreement clause though need to consider the existence of the agreement for the purpose of granting interim relief or protection. The Chief Justice or the designated Judge under Section 11 as referred above and as decided by the Apex Court needs to consider the existence of the agreement, jurisdiction, and arbitrability of the matter/ claim including limitation under various circumstances. However, as recorded in National Insurance Company Limited vs. Boghara Polyfab Pvt.Ltd. 2009 (4) Bom.C.R. 891, the Apex Court has elaborated the scope an power of the Chief Justice and or the Designated Court. Therefore, after deciding the existence of arbitration agreement, the Chief Justice in a given case may refer the matter to the Arbitral Tribunal to decide the issue of limitation and or even the validity or nullity of the Arbitration agreement. Once the Chief Justice decides the existence of Arbitration agreement, then it is difficult for the Arbitral Tribunal to decide that issue again, unless directed otherwise.” 18 The submission that though the Arbitrator has been appointed and as there was no objection raised at the relevant time and as the same Trust Deed and clause was referred and as that was the basis of appointment of Arbitrator, still as rightly contended by the learned counsel appearing for the Respondent Nos. 1 and 2 that there is no estoppel and/or the parties/Respondents are not debarred from raising such objection even at appropriate stage before the Arbitral Tribunal. Even if that is so, I see there is no reason to consider the 12 arbp987.09.sxw ssm case of the Petitioner under Section 9 for a simple reason that unless the Arbitral Tribunal takes decision under Section 16 or otherwise, prima facie it is sufficient for the Court under Section 9, to consider that there exists the Arbitration Agreement and the dispute is arbitrable between the parties. Even otherwise, the parties can agree for Arbitration, at any stage of the proceedings though they were not parties to the original arbitration agreement. Whether there exists Arbitration agreement between the parties in view of clause 20 of the Trust Deed or the parties agreed to refer the dispute out of the Trust Deed or otherwise, to settle their dispute, in the present facts and circumstances, in my view, needs to be decided finally by the Arbitrator under Section 16 of the Act, if raised, but subject to the observation as made in Perma Container (supra) based upon National Insurance Company (supra) & S.B.P. & Co. (supra). 19 Now, whether case is made out for interim relief or not is another and basic factor. After hearing both the parties, this Court has not granted ad-interim relief on 24th November, 2009. The parties proceeded at that time on the basis of denial made in the averments in the affidavit filed by Respondent Nos. 1 and 2 on the date of hearing. The learned senior counsel appearing for the Petitioner now referring 13 arbp987.09.sxw ssm to the reply submitted that there is a case made out to grant an interim relief in terms of prayer clause (a), (b) and (c) also. 20 A Notice of Motion is taken out by the Petitioner by contending basically that the minutes of the meeting of board of trustees held on 12th January, 2007 by which, time as referred to Trust Deed has been extended for further 10 years is a fabricated document. That resulted into denial of his rights as per the basic agreement/ deed in question and prevented him from the benefits as provided in trust deed till 24th March, 2017. The Arbitrator even otherwise cannot decide this issue of fabrication even if any. 21 The point still remained that the parties have consented, even the Petitioner, to refer the matter revolving around the Trust Deed. It also means to decide all the disputes and differences arising out of the same and including the interpretation of clause 20 and; whether there exists power to extend such date as referred in the minutes of meeting dated 12th January, 2007 in question. Having once appointed the Arbitrator, in my view, unless the Arbitrator decide and interpret the particular provisions as per the rival contentions of the parties, subject to objection even if any, the minutes of meeting dated 12th 14 arbp987.09.sxw ssm January, 2007 just cannot be overlooked. Therefore, the extension so granted if taken note of, the contention so raised by the Petitioner, in my view, cannot be adjudicated at this stage in Section 9 Petition for granting interim relief as per prayer clauses (a) (b) or (c). The Petitioner is not entitled for any benefit till expiry of extended date 2017. Therefore, no reliefs as prayed. 22 The issue of fabrication, even if as raised that also revolved around the interpretation of the deed clauses, just cannot be adjudicated even in this Section 9 Petition, in the present case at this stage. 23 So far as the point revolving around the shares and misuse of the rights arising out of the same as contended even if taken note of, still unless the Arbitrator decide this case and interpret the power of extension so recorded in the resolution in question and as the company matter cannot be the subject matter so far as present petition is concerned. This point also cannot assist the Petitioner to grant reliefs under Section 9 of the Act. I am not deciding the rights of the petitioner as available under the Company Laws revolving around the trust deed, if any, which is again subject to final decision by the 15 arbp987.09.sxw ssm Arbitrator. However, it is made clear that the Arbitral Tribunal to decide the contentions in accordance with law uninfluenced by this judgment. 24 As noted in earlier order dated 24th November, 2009, which remained intact till this date, in this back ground, and as there is no balance of convenience and equity lies in favour of the Petitioner, therefore, keeping all points open, I am not inclined to grant any relief as prayed in this Petition. The petition is accordingly dismissed. There shall be no order as to costs. (ANOOP V. MOHTA, J.)