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Arbitration Act, 1940: Section 2(p). Arbitration agreement-Attributes of~Decision or Award-Memorandum of Understanding (MOU)-Recorded family settlement of disputes as regard division of assets between two groups of the same family-Experts 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, the Chairman gave his decision-Held: Attributes of arbitration agreement are: Existence 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 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 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 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. Hindu Law:Family 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 constituting Group A on the other. To resolve these differences, negotiations took place with the help of the financial institutions 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 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 company. Pursuant 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 MOU stipulated that disputes or clarifications relating to implementation. were to be referred to the Chairman, Industrial 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, IFCI in view of Clause 9 of the MOU. The Chairman, IFCI formed a Committee of Experts to assist him in deciding the questions that arose and gave his detailed decision/report. The Chairman, IFCI described this report as his decision on each dispute raised or clarification sought and quoted in his covering letter that since the MOU had already been implemented to a large extent it was left to the members of both the groups to settle amongst themselves the family matter without any further reference to IFCL According to the decision a certain sum was payable by Group B to Group A.This report was not filed in Court as an award nor was any application filed by Group B to make the Report a rule or decree of tlie Court. The appellants (Group B) filed an arbitration petition under Section 33 of the Arbitration Act, 1940 before the High Court challenging the legality and validity of the said decision of the Chairman, IFCI on the basis that it was an award in arbitration proceedings between Groups A and Group B. On the same day Group B also filed a Civil Suit in the High Court challenging the same decision of the Chairman, IFCI. The averments and prayers in this suit were substantially the same as those in the arbitration petition. In one paragraph, however, in the plaint, it was stated that the same reliefs were being claimed in a suit in the event of it being held that the decision of the Chairman, IFCI was not an arbitration award but was just a decision.The High Court held that the decision of the Chairman, IFCI was not an award in arbitration proceedings and, therefore, the arbitration petition was not maintainable. As regards the suit the High Court held that it was an abuse of the process of the court since the allegations in the arbitration petition, and the plaint in the suit were identical and both the proceedings were instituted on the same day. The High Court, therefore, struck down the paint under Order 6 Rule 16 of the Code of Civil Procedure, 1908 and dismissed the suit. Hence this appeal. The following questions arose before this Court for determination:-(1) Whether Clause 9 of the MOU constituted an arbitration agreement; and whether the decision of the Chairman, IFCI constituted an award?(2) Whether the Suit was an abuse of the process of the court? |
